What You Need To Know About Debt Negotiation Support

Is your life being destroyed by debt? Are you cannot repay what you owe? Are your monthly lowest payments draining your income and holding you back from paying off the balance of what you owe? If that?s the case, and if you want to steer clear of bankruptcy proceedings, debt settlement help may be the right choice for you.

How does debt settlement help work? Debt negotiation is a type of financial negotiation where consumers deal with their creditors. Customers aim to get out of enough of their debts that they can afford to repay the rest, while lenders wish to collect as much of the debt as they may get in lump-sum payments. The negotiation they ultimately reach will typically call for the consumer to pay about 40-60% of her debt at once, in return for a release from the remaining 40-60%.

Debt negotiation is a booming business, and debt settlement help is easily available. More customers have come to see its value as a means off the so-called ?credit treadmill,? while more creditors have come to see it as a way to get back some of their money instead of losing all of it in bankruptcy or collection lawsuits. For consumers it represents an escape from the so-called ?credit treadmill?; for lenders, it offers an increasingly reliable technique to collect a considerable portion of their money, instead of seeing it all disappear in bankruptcy or collection proceedings. And with new federal rules put in place over the past two years, debt negotiation is now a lot more reliable business.

Getting stuck on the credit treadmill means you?re making never ending minimum monthly payments on your debts, which reduces your income and depletes what little money you might have been able to spend on the outstanding balance. Often it seems the only escape is filing Chapter Seven bankruptcy, but most consumers don?t qualify, and the credit of those who do is destroyed. This is where debt negotiation help comes in.

Regrettably, debt negotiation companies have acquired a less than savor reputation over the years. For several years it was an unregulated sector, and dishonest organizations were able to charge high up-front fees, then do nothing to reach settlement agreements for their clients. These companies also often failed to inform customers of the risks of debt settlement.

But in 2010 the FTC adopted new amendments to its Telemarketing Sales Rule, which applies to telemarketing and similar practices. Organizations that sell debt negotiation help over the telephone are not allowed to charge fees before achieving settlements reducing their customers? debts. Also, they are banned from front loading fees and charging customers more for first negotiations than for subsequent settlements, an arrangement that would create an incentive for unethical companies to expend all their efforts on one negotiation per client.

Settlement organizations also must disclose how long negotiations will likely take, how much they?ll cost, and the possible negative consequences of debt settlement. For instance, choosing to settle your debts will sometimes result in a damaged credit score ? although the damage from a bankruptcy is usually worse.

Many consumers decide to bypass debt negotiation help negotiate with creditors on their own. There is normally a problem, though: Solo consumers lack the bargaining power of settlement companies, which have frequent business contacts with creditors. Customers acting without help also have to work their way through creditor bureaucracy alone.

Source: http://www.flemingforum.org.uk/?p=1612

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