Debt Settlement As An Alternative To Bankruptcy

This is a very effective way to get rid of your debts, but it's a very serious step to take. Debt negotiation, also known as debt settlement, is a process that you could do on your own, but there are some reasons to consider having professional help.

First, it's not a pleasant process and secondly, when you use a professional organization to negotiate for you, they not only have working relationships developed with the other side but they handle large numbers of accounts, in effect giving them volume discounts. They will also be on top of the industry trends and know if any creditors are in need of cash and are offering specials. As strange as it may sound, with the debt collection industry there will, on occasion, be sales, as in, "We normally settle for 45 cents on the dollar but for the next two weeks we'll accept 32 cents". I know it sounds weird, but it does happen. You won't know about it, but your negotiator probably will.

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How It Works

Simply put, debt negotiation works because you quit paying your bills. Please let me explain. You will quit paying your bills to your creditors and start saving what you were paying to them. Your negotiation company will want you to have a special account set up just for this purpose. When enough money is saved up your negotiator will contact your creditor and settle the account. This process is pretty simple. But wait! There's a lot more you need to know before you go down this path.

Why It Works

This strategy works because after your creditors go unpaid for a substantial period of time they think you've skipped out on them. When the negotiator calls with a cash offer, they understand they won't have to go looking for you, and with the idea that something is better than nothing, they'll take the offer.

Oh But It's Not Quite That Easy

It may come as no surprise to you, but your creditors will not be at all happy when you stop paying your bills. You may become familiar with the sound of you collectors voice, stacks of mail, and terms like; collection agency, lawsuit, summons, judgment, wage garnishment, lien, attachment and more "fun" legal terms. I'm going to tell you this again, but pay attention this time, too. If you're going to drop out of the program when things get tough; don't even start just move on to another path right now.

For this plan to work you have to be determined; because it may take over three years and you can't give in to the easy way out. Here's what I mean. Simply telling your creditors that you plan not to pay them for two years while you regularly put money into an account with a company that will settle you account for pennies on the dollar isn't going to work.

You have to tell them nothing! And they're going to be...not happy. As a matter of fact they're going to use every legal means that they have to collect the bill and collect it now. Unfortunately the measures taken against you may not end with the legal ones. I hope you're sitting down because on occasion bill collectors have been know to go beyond their legal rights to collect their money.

The Debt Collection Process

For your debt negotiation strategy to work, you're going to have to be very familiar with the debt collection process and have strategies in place when offensive tactics are used against you. Read through my Debt Collection Process section. It's best to be prepared in advance for creditor calls, late fees, over-the-limit charges, collection letters, collection agency phone calls (not pleasant), letters from lawyers, summonses, lawsuits and judgments. None of these will stop your negotiator
from settling your bills when there's money available. Many or all of these things may happen to you when you're in a debt negotiation program.

If you are going to want to drop out of the program when you get a nasty phone call from a collection agency, find a different path.

Your Debt Negotiation Company -

Your debt negotiation company should help you with strategies that assist in dealing with collection issues. Allow them to help you, but it's going to be up to you to make the process work.
Your debt negotiation company won't hang up the phone for you if you get a nasty call; you've got to do it yourself. They won't lend you money to pay your bills; you've got to be able to make regular payments into your settlement account. But if you work together as a team you will be successful.

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