Debt Negotiation Firm

A debt negotiation firm offers the benefit of a proven and strategic plan to negotiate a credit balance and give the debtor the chance to make a decreased lump sum payment, considered paid in full to his creditors. These companies rely on the accuracy of the data given to them to promote an effective settlement, agreeable to both the debtor and the creditor. The creditor usually already has an established relationship with the debt negotiation firms handling the negotiations, which facilitates familiarity in the process of settling a account. This process enables the debtor to benefit financially from the previously established relationships between debt negotiation firms and creditors.

The agency will contact a creditor and inform him of a first offer made by the debtor. For example: A debtor has a $5000 balance on a credit card. This debtor is in serious delinquency and is considering filing for bankruptcy. The creditor is contacted by the debt negotiation firm and informed of the debtor's situation. The agency usually starts by asking if 20 percent of the balance or $1000 can be paid to the creditor and considered payment in full. A creditor will try to get the firm to settle at a higher rate, and may counteroffer with a settlement of 40 percent of the balance or $2000.

If the debtor is unable to pay the 40 percent, the debt negotiation firm will relay the information back to the creditor and inform him that, if the original offer is not taken, the client will be forced to file for bankruptcy and the creditor will get nothing. If the creditor agrees, then the settlement is written up stating that the debt is paid in full as per agreement. On the debtor's credit report, the word "Paid in Full" should appear under the previously delinquent account.

There have been far too many cases where the debtor has paid the agreed amount, but the creditor did not report the "Paid in Full" status to the reporting agency, and refused to do so once the error was discovered. This has forced many people to file for bankruptcy anyway, and lose the money that they had paid to settle delinquent loans. Choosing the right debt negotiation firms requires research and time. Contacting the BBB or Better Business Bureau will give the consumer a business rating for the agency as well as list any complaints that may have been submitted by previous consumers. Another important aspect of this process is for the client to change his spending habits so that he will not repeat his past mistakes. James 5:2 warns us that "riches are corrupt." Our attitude should never be on the wealth of this world, but on the riches God offers those who serve Him faithfully.

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