personal debt tips

Expert personal debt tips to guide you with your money.

Getting the Best Solution with Your Debt Negotiation

Smart people can get into overwhelming financial situation, but they know that declaring bankruptcy, although tempting, usually has negative consequences that often are not worth it. Smart people with debt problems seek credit counseling or debt negotiation services to help them move forward. Representing yourself in debt negotiations, like representing yourself in court, is fraught with danger. If you are not a professional negotiator, don't have endless time and resources, beware. Frankly, negotiation is an uncomfortable and stressful proposition for anyone.

This is why debt negotiation services are so popular. Your representative will negotiate with your creditors, get solid and reasonable settlements. Then all you have to do is make your payments, keep good spending habits and you'll be on your way to financial balance.

Does Debt Elimination Arbitration Truly Eliminate Debt?

Be cautious of false promises that seem too good to be true when you are checking into debt solutions. Often fraudulent services and businesses will advertise that they can completely eliminate your debt through debt negotiation and arbitration. The truth is that bankruptcy is the only way to erase debt. Debt arbitration means that each party in a matter has representation and that a neutral party presides and provides a decision with which the parties must abide. There is no guarantee that a creditor will erase a debt, in fact, it’s doubtful. If they can get even a portion of the money owed, they will. Debt negotiation and arbitration is a viable financial solution, but be careful to make a wise decision on your representative or service provider.

Debt Arbitration – Be Prepared to Compromise

Debt arbitration can be entered into voluntarily or it can be ordered by a bankruptcy court. Arbitration means that your and your creditor will have a spokesperson, and that a neutral individual will decide the outcome of the dispute. In some cases, your representatives may negotiate directly and decide a settlement between them. You should understand all of these proceedings and their consequences before you accept an offer. If a creditor makes a reasonable offer, be prepared to compromise. If you enter debt arbitration thinking your debt will be eliminated, you will surely be disappointed. Set your expectations appropriately. Additionally, if possible, have a professional help you through the proceedings. They will be knowledgeable of the debt arbitration process and can advise you what to expect. At the end of the proceedings, you will have a solution in hand, so try to relax and look toward the future.

Debt Negotiation and Settlement Advice

From family to friends, everyone has opinions about debt negotiation, but most are not very qualified. Following are some tips from attorneys who handle debt negotiation and settlement proceedings.

Remember that creditors want to collect their money and that it is up to you how much they will get. Because of this, be honest about your situation but don't sugar coat your situation. Explain what got you in your predicament – illnesses, accidents, employment problems, etc.

Never tell a creditor where you work or where you bank. In the event of future action, let them do their own research. If you are asked any of these questions during your debt negotiation or settlement, do not answer until required to by a higher authority.

Lawyers can be of assistance in debt negotiation and settlement, but remember that they will charge fees. Unless you have very high debts to settle, chances are that the attorney fees are going to be more than you can afford. At the minimum, meet with an attorney who can analyze your situation and advise you on what would be a reasonable solution.

Ensure that the creditor reflects your account as ‘Satisfied in Full' on your credit report when your debt negotiation and settlement has been reached. Anything less may harm your credit score.

These are great tips for getting through a debt negotiation and settlement procedure. If you have more questions or want to be more prepared for your negotiation, consult with an attorney or credit specialist who can advise you further.

Finding Debt Negotiation and Settlement Services

You have a few options find a responsible debt negotiation professional to represent you:

  1. Attorneys who focus on debt negotiation and arbitration. If you need bankruptcy counseling or a strong negotiator, you may want to start with a lawyer in your local area. You can get a referral from your state bar association or from someone you know and trust. If you have an attorney that you consult with regularly, contact them for a referral as well.
  2. Look on the internet. Go to your search engine of choice and search on “Debt Negotiation and Arbitration” and put in your local city or state. There are national and statewide programs available. However because different states have different guidelines, find an expert in your area.
  3. Credit Counseling Services – Credit Counseling Services are professionally trained to find debt solutions and give smart, personalized recommendations specific to your situation. They can refer you to the right banks, financial planners, debt negotiators and credit services to help you repair your financial situation.

Debt Negotiation Services Work Best One Debt at a Time

When you think of debt negotiation, you probably want to get it over with as quickly as possible. However, in fact, one debt at a time actually yields better results. The reason is that the settlement a creditor will offer you is based on your credit score, your history with them and the amount of debt you have. If you negotiate your largest debt first, when you get to the second debtor, the first debt will be off your credit report, your credit score will be improved and you may get a better deal. As you move forward from creditor to creditor you are in a better and better position to negotiate. In this case, patience can save you money.

Debt Negotiation – Something is Better than Nothing

Debt negotiation is often viewed as a financial solution that satisfies both the creditor and the debtor. This is because the debtor avoids bankruptcy and a long term negative mark on their credit report and the creditor does not lose all of their money. Bankruptcy conveys a message to your creditors that they are never going to see the money they lent you and you are left with higher interest rates, poor credit and a questionable financial future. You borrowed money in good faith and it's your responsibility to pay that debt. Of course, bankruptcy is a necessary step for some, but make sure you are getting good advice from a professional before you move forward with such a drastic solution.

Debt Arbitration, Negotiation, and Bankruptcy – What are the differences?

How does debt arbitration differ from bankruptcy? Here are some basic differences between these two debt solutions:

  1. Arbitration and negotiation never become part of the public record, but a bankruptcy does. A bankruptcy will remain on your credit report for years. It is a legal document that is recorded with your state. Debt arbitration or negotiation results in settlements with your creditors and although your credit may look questionable for a while, it will rebound more quickly than with a bankruptcy.
  2. How you pay your debts is a part of your credit report and your credit score. In the case of weighing bankruptcy and debt arbitration and negotiation, consider the following:
    • "Paid as Agreed" on your credit report indicates that you fulfilled your contract to your creditors.
    • "Paid" on your credit report indicates that the debt was paid through settlement or some other means.
    • "Defaulted" indicated a bankruptcy or complete loan delinquency.

      Both of these options have their pros and cons. This is merely a snapshot of some of the differences. Contact a professional before deciding on either of these options.

Get a Reasonable Settlement in Debt Elimination Arbitration

Repairing a problem with debt is stressful and if you have many options presented to you, the situation becomes even more complicated as you proceed. Debt negotiation and arbitration is one way that people use to solve their money problems. This isn't the best option for everyone but you will reduce or eliminate a lot of your debt.

When you start negotiation processes with creditors, they will offer you a settlement. Many people accept this first offer simply because they want to get the situation settled. However, if you have a professional negotiator or arbitrator working for you, you'll end up with a better deal. If you are going to try and negotiate yourself, know what you need to make a good deal and be patient. Remember that the purpose of all of these activities is to relieve your financial burden so you can move forward.

When Should You Retain Professional Debt Negotiation Services?

Have you considered finding a professional debt negotiation service, but aren’t sure if you really need it? Here are some situations that indicate you may need professional help:

  • Multiple Creditors – Do you have numerous creditors pressuring you because you haven’t made payments? If you're buried under debt, using a debt negotiation service may be a smart decision.
  • Huge Amounts of Debt –If you have large debts from medical expenses, high limit credit cards or business loans, you should consult a professional.
  • Tax Complications – If your debt has any tax ramifications or is related to your taxes, go to a professional and avoid an additional problem with the federal or state government.

    If you feel overwhelmed with debt and creditors, it is wise to call a professional and find out if you can take benefit from their services.