Reducing Debt With Negotiation

We call it the minimum payment trap. You may be all too aware of it. Each month, your creditors send you a bill noting that you'll be OK as long as you pay the minimum payment required. The truth is, by paying the minimum payment on your credit card, you are in fact NOT OK, while your credit card company is very happy, as they get to profit from the high interest they are charging you. Paying minimum payments on your credit card is also a practice which can never be long term. After a while, it naturally becomes very damaging to your credit, because your minimum payment continues to grow, and you soon find yourself unable to keep up.

When You Hit A Dead End
The dreaded minimum payment plan has taken over. You are no longer in control. The question is, where do you go from here? The answer may have to be debt negotiation. Certainly as a professional debt negotiation firm, Debt Management Advisors is certainly here to help. But, it would be biased to say that there is absolutely nothing you can do to negotiate for yourself. In most cases, it is very difficult for an individual to successfully negotiate with creditors (read about debt negotiation here), but there are instances where this can work.

| Ideas For The Do It Yourselfer
Again, while it can actually be quite damaging to go to your creditors yourself (never provide information which can be detrimental!!), some do choose to go it alone. There are a few things you should know in order to not put yourself in a situation that is worse than the one you're already in. First of all, understand exactly what organization you are dealing with. This means, for most situations, your creditors directly. But, if you have missed payments for some time, you may have to speak to collection agencies, which is a daunting task at best. Any offers you make which may be agreed to must be confirmed in writing. Never, ever, take creditor representatives at their word. This is simply a must.

Two Ways To Go
There are some creditors who will only deal with professional firms, and will basically feed you a written script as to why you cannot negotiate with them. Unfortunately, it is virtually impossible for a non-professional to work with them. But, if this is not the case, you should know exactly what you're looking for when attempting to negotiate a debt. There are two things you should consider, the first being a settlement plan, wherein you agree to only pay a portion of your debt. For this to occur, you typically have to be suffering from real hardship, and these types are typically better handled by professionals. On the other hand, when you are negotiating for yourself, you may be able to get rates lowered and have a structured payment plan set up. This is somewhat similar to credit counseling (which we also provide for some clients), and many creditors are open to this. But, you must stick to the payment plan, or there can be harsh consequences, especially if you negotiated for yourself.

If by some chance you do get a debt settlement, congratulations! Less than 5% of people are able to do this on their own. What you'll want to do from there is make sure that as the settlement has been agreed to, you will need to ensure that any negative notes have been removed from your credit report. Ensure that you are polite during this whole process, as you are asking them for help, and they have no reason to do you any favors at all.

Gambling On Self Debt Negotiation
Self negotiation is something we would never recommend, simply because it can put you in a much worse situation than you are now. Creditors are there to use any information you give them against you, and are trained to ensure you almost never get a debt settlement. But, in the rare cases where it does work, it is a fine way to get out of debt and avoid bankruptcy. Although self-negotiation may leave minor notes on your credit, they are not nearly as bad as the catastrophic effects of bankruptcy.

Before you consider this avenue, however, consider contacting us here. We can help you sort through your options.

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