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What is Debt Negotiation and How Does it Work?

30 May 2014

What is Debt Negotiation and How Does it Work?

If you feel like you are in serious financial trouble because your debts are increasing each day rather than shrinking, your income is not enough to service the amount of debt you have and creditors are sending letters every week or calling regularly then you may be considering that filing for bankruptcy is your only way out.

Debt negotiation is a strategy many can take that can often be used to avoid the process of bankruptcy.

What is Debt Negotiation?

Debt negotiation is an assertive approach to reducing and eliminating debt. Debt negotiation occurs between the money lender and yourself to find a mutually agreeable amount to settle on. As the money lender is experienced at this and it may be a new experience for the consumer, it is often useful to engage the services of experienced debt negotiators.

The negotiated debt is normally paid as a lump sum and this can be a compelling reason for creditors to be flexible. The result of debt negotiation is usually the elimination of debt obligations for a compromised amount that is, an amount that is less than the full amount owed.

How does Debt Negotiation Work?

Debt negotiation only works if your creditors are willing to settle for a lesser amount. Debt negotiation results in you having a lesser amount to pay. As the entire process is a negotiation there may be several stages to the proceeding before a settlement plan is agreed upon

Debt negotiation specialists take the emotion out of making a decision and they are skilled at negotiating with creditors. They are acquainted with the process and the lenders and use this to achieve a beneficial outcome. A good debt negotiator can often help because the creditor knows the negotiator has had a good track record of successful payouts and ensuring results. That is one of the reasons why they will be able to help you.

How can credit companies write off debt?

Always remember that the debt you owe is mostly profit for the credit companies. The principle you once owed many years ago may have been paid off many times over. If you are willing to make a lump sum payment as a full and final payment for your debt, often the credit company will take this offer if the terms are favourable. Debt negotiation can be a win-win situation for all the parties involved.

Fox Symes is the largest provider of debt solutions to individuals and businesses in Australia. Fox Symes helps over 100,000 Australians each year resolve their debt and take financial control.

If you are in debt and want to know more about the solutions available to you contact us on 1300 361 204.

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