If you're unable to manage your debts by cutting your expenses or don't find it favorable to consolidate your bills and reduce the interest rates, you may go for a debt negotiation program. Whether you have mounting credit card bills, payday loans or medical bills, a debt negotiation program can help reduce your outstanding balance so that you find it easier to repay and get out of debt.

What is debt negotiation?
Debt negotiation is a process of negotiating with your creditors to pay off your credit cards and other unsecured debt for an amount less than you currently owe, often at a 40-60% savings. Student loans, auto loans, and home mortgages are secured debt and do not qualify. However, we can help with car loans after they’ve been repossessed.

Does debt negotiation really work?
Yes it does. Debt negotiation works best for people who cannot pay their bills, are behind in their payments, or are considering bankruptcy. It is not designed for consumers who have less than $5,000 of debt or who can still make their payments. It is a more aggressive approach to getting out of debt, and is not right for everyone. But debt negotiation is a proven method that does work.

How do you benefit from debt negotiation?
Debt negotiation offers you the following benefits.
1. Reduced balance: Negotiation helps to reduce your outstanding balance so that you can pay off bills faster than you've ever thought possible.
2. Lower payment: Your monthly payment to the negotiation company is comparatively lower than what you've been paying your creditors.
3. No extra charges: Negotiation helps you to avoid paying extra charges like late payment dues or over-the-limit charges (for credit cards).
4. Avoid harassment: Your creditors and collection agencies may stop making harassing calls for debt repayment.
5. Negotiate account status: The negotiation company may negotiate with your creditors/CAs and try to get the account reported in your favor. This is to make sure that the account status on your credit report is "Paid as agreed" or "Settled" etc. The purpose is to minimize the negative impact on your credit.

How much do you pay for negotiation?
Debt negotiation fees depend upon the number of credit accounts you have, the amount you owe and the money you can save through negotiation. Some companies may charge 25%-35% of what you save.

Does debt negotiation hurt your credit?
Creditors don't agree to negotiate the debt until and unless you're behind for 3 months or more. Moreover, negotiation requires you to stop paying creditors till you have gathered enough funds to settle your bills. Since you don't make payments for a number of months, your credit report shows the account as "delinquent". Your account may also be charged-off by the creditor or collection agency. Such things ruin your credit and bring down your score. However, once you settle the bills, your credit score will improve gradually with time.

With debt negotiation, your credit gets tarnished and you may incur taxes on forgiven debt. However, negotiation reduces your liability towards debt and here lies its importance. The purpose of debt negotiation is to help you fulfill your obligation so that you can lead a debt free life.

Author's Bio: 

Schryver Law Group providing services in Debt Negotiation , bankruptcy, mortgages, reduce liability and more with practical, common sense, and cost effective solutions to pressing business and legal problems.