Debt Negotiation Can Eliminate Need For Bankruptcy Filing

Online, March 19, 2012 (Newswire.com) - Debt negotiation is one way get your debt substantially reduced, as long as you pay the agreed amount off in full, or you agree to pay according to terms as long as you are granted a reduced payment amount or interest rate. Everyone knows this.

But what you may not know is that debt negotiation is also a way to avoid bankruptcy. If you're drowning in debt and just can't pay your bills, it may seem that bankruptcy is your only choice. But opting for debt negotiation is a much better choice.

So when is bankruptcy the right choice? Bankruptcy should be your last resort, and should only be your go-to if all other possible options have been attempted and have failed. Why? Because bankruptcy has a long-term negative effect on your credit, and it can affect your ability to get a home, a car, employment or insurance.

How does debt negotiation work? Either you or a professional debt negotiator you've hired works with your creditors to reduce the amount of your debt by a great percentage. This reduces your monthly payments, making it easier to repay the debt according to terms. Sometimes creditors will agree to a debt negotiation only if you are able to repay the agreed upon amount in full. Either way, you wind up paying less.

In some cases, creditors are willing to lower your interest rate or suspend late fees to help you meet your obligations. It's in the creditor's best interest to do so, since they will at least recoup some of the debt, rather than none.

In some cases, creditors will insist on a settlement account, which is an account in which you deposit money to be used for the sole purpose of repaying your debt.

So, when do you pursue debt negotiation? Typically, debt negotiation becomes an option when you have failed to make a payment for three months. It is also a viable option if your creditor has filed a lawsuit against you for nonpayment. You may be able to settle the debt rather than be sued.

There are many advantages to debt negotiation, but the greatest is that your debt is greatly reduced. Another advantage is that you can pay up your debt when it works best for you or at a time that you and your creditor have determined together. You can also make your repayment plan into a more organized and systematic arrangement. And no calls from creditors - always a bonus.

Debt negotiation can be the first step toward becoming debt free - as well as worry free.