Given the recent changes in 2005 in the bankruptcy laws, it has gotten tougher for us as consumers to file for bankruptcy. What else can we do, if we get in over our heads with debt and its getting old treading water every month? One alternative is debt negotiation.
Anyone can negotiate their own debt settlements. It takes time and tenacity. The purpose of this article is not to provide a step by step guide to debt negotiation. Rather, I'm suggesting that you put down the step by step guide if you have one to consider why you would use a debt negotiation company or even an attorney for your debt negotiation.
Creditors and their collection companies, use just about every trick in the book to get you to pay the full amount of what you owe. Then, if the collector can't get you to pay the full amount, they start trying to get you to pay almost the full amount, and you get more phone calls and letters.
Ever had a collection agency call you? I have, it's not pretty. I wasn't pretty with the collector. Poor collector. I actually got off the phone feeling guilty about how badly I treated them. However, I wasn't going to be talked to the way that person talked to me.
Why are they so insistent in getting your money? Collection agencies make their money from the money that they can get you to pay. Sometimes it's in the form of a percentage of what you owe with the rest going back to the original creditor and sometimes it's the full amount if they have purchased your account from the creditor.
If you are following my thoughts here, doing your own debt negotiation will take a lot of patience and thick skin. This alone could be consideration enough for some folks to hire a debt negotiation professional. For the rest of you, who need more reasons, keep reading.
For starters, debt negotiation companies can stand in between you and your creditors. They negotiate with the creditor, not you. They know how to effectively communicate with the creditors to have them stop the phone calls.
If you hire a law firm to handle your debt negotiation, you can go one step further in protecting yourself. If you have collection accounts, you do run the risk of a creditor getting your money from your bank account through legal means. With an attorney's trust account, you don't need to worry about your money getting taken by your creditor collection companies.
Let's explore more about why you would want this type of protection? When you file bankruptcy, one of the benefits of being in bankruptcy is that creditors have to stop harassing you – including the collection agencies. While in bankruptcy, no one can mess with your credit report, your bank account or your paycheck. If you keep your money in the bank, you run the risk of a creditor getting your money. Remember that while you are in a debt negotiation program, you are not offered the creditor protection that you would be if you had filed a bankruptcy. When your money is with the attorney's trust account, your money can't be touched. In a debt negotiation program, you are settling your debt over a period of time. This means that you can make monthly payments rather than having to have all of the money at once. Keeping your money in a trust account will give you peace of mind.
Didn't the new Bankruptcy law make it harder to file a bankruptcy? Yes it did, but it didn't change human behavior. People that are not likely to pay their bills still aren't going to pay their bills with the new law. You don't have to file a bankruptcy to not pay a bill. Some people avoid bill collectors for years.
If you decide not to use an attorney, there are hundreds of unlicensed third party debt negotiators out there. Some are good and some are not so good. I would definitely do your homework. The better business bureau is a great place to start. I would even do a Google search to see if there is any bad press about the agency that you are planning to use.
Article by Dave Mason, Mortgage Broker
