The truth about debt negotiation

Debt negotiation companies offer help to people in Florida who are having trouble getting out of debt. While these companies can often help debtors to negotiate settlements with their creditors, there are downsides to using debt negotiation as a solution to debt problems. One of the downsides to debt negotiation is that the process usually cannot begin until the debtor is delinquent on their bills.

Debt negotiation usually takes about 24 to 48 months and results in an average debt reduction of about 50 percent. The total amount that a debtor will have to pay to settle their debts does not include the fees that they will owe to the debt negotiation company. New laws do not allow debt negotiation companies to ask for upfront fees before a debt has been settled or reduced.

A person who is thinking about working with a debt negotiation company should consider how the process might affect their credit score. Debts must be delinquent before negotiations can begin, so there is always a risk that a creditor will use aggressive collection methods before a settlement is reached. Debts that are negotiated and settled will remain on a person’s credit report for seven years. However, delinquent accounts that have been settled will not affect a person’s FICO score.

Ongoing debt negotiations do not always stop creditor harassment or prevent utility companies from issuing shut off notices. On the other hand, filing for Chapter 13 bankruptcy can allow a debtor to enjoy the benefits of the automatic stay that halts all actions by creditors. A person who is overwhelmed by debt may want to talk to a bankruptcy law lawyer about all of their options.