In the wake of the recent recession, businesses closed, banks needed to be bailed out and millions of Americans were left with unmanageable debt. For many there is no end in sight to the creditor calls, harassment and elimination of their debt. Counseling services, debt consolidation and other forms of relief have spring up and these companies were able help many people get back on track with their finances. Another option that has emerged and has also been the target of some skepticism is negotiating credit card debt. Many people in less dire straights might opt for a debt consolidation quote from a lender, but you are probably beyond that point if you are reading this now.
What is debt negotiation?
Companies that offer consumers help with managing excessive or out of control debt often use tactics called debt counseling or debt consolidation. Counseling entails coaching consumers on how to use their available resources on gradually paying down debt. Consolidation services involve a third party company disbursing predetermined monthly payments based on your income to all of your creditors. Negotiating debt has nothing to do with either of these services. Debt negotiation for eliminating credit card debt is performed by a third party company in which your total debts are brought down, sometimes by up to 50 to 60% of the original amount and eliminated with one, two or three time payments.
Is this a legitimate service?
Here is where things get a little hairy because there has been some skeptics toward companies in this industry of settling credit card debt – and rightfully so. After the recession, dozens of companies sprang up promoting negotiation services and subsequent report to better business bureaus and similar institutions started flooding in. A business may entice consumers saddled with debt that they would be able to significantly reduce the debt by talking with the consumer’s creditors. These services rarely had luck doing so and often charged customers high fees and monthly charges for participating in programs.
Although many negotiation companies cannot be trusted, sometimes to negotiate credit card debt yourself isn’t your strongest option. The best way to accomplish this goal is to how to negotiate with credit card companies with the help of a lawyer. Attorneys are beneficial for talking down debt in a few ways. First of all they are regulated heavily by the state in which they practice law making it very easy to check if they are reputable or not. Another reason they are resourceful is that they know the law pertaining to debt matters in their respective states. This is opposed to employees of a negotiation service who may have little or no legal training. Lawyers also have more leverage because they can use the courts if creditor contracts, actions or other factors are out of place. They can easily threaten things like bankruptcy or going to trial whereas a negotiation service has no such leverage.
Negotiating credit card debt settlement can be a very delicate process that should be left to a trained legal professional. And depending on your amount of debt the credit card debt forgiveness act might be able to help you out. Companies may make small concessions to consumers who call in themselves however if your debt has been festering and moving through the secondary market, it can be difficult to determine what really is a good deal for your particular situation. An attorney may cost a little more to hire than a debt negotiation service however you may actually end up paying less on your current debts.