Negotiation Debt Settlements

A negotiation debt settlement is an attempt to convince a creditor to lower the balance a debtor owes in order to make a lump sum payment on that balance, and consider it to be paid in full. Negotiation debt settlements can occur between debtor and creditor, or between debtor, creditor and a third party agency. An agency works to negotiate credit account balances on behalf of the debtor. Many debtors are enlisting the help of representatives because these individuals have a proven track record of getting the credit account balances to a lower level than the average debtor. "Hear instruction, and be wise, and refuse it not." (Proverbs 8:33)

Settling is a difficult task because negotiations are not easily agreed upon. The creditor wants to see proof of inability to pay. This proof is usually found in credit and income history reports. If a debtor is delinquent on more than one account, and is in no position to earn more money, a negotiation debt settlement may be an option. If a debtor would make a good bankruptcy candidate then settling is an option. The reason for this being that a creditor knows they will receive no money if a request for bankruptcy is filed.

When an agency attempts a negotiation debt settlement, they have usually obtained the debtor's credit report and financial history. This enables negotiation debt settlements to proceed quickly. Once the debtor and the creditor have agreed to the terms, the new balance is paid, and the information is reported to the credit reporting agency. It is first the responsibility of the creditor to pass the information to the credit reporting agency. This frequently does not happen, and the debtor must provide proof to the credit reporting agency in order for the debt to be removed from the debtor's credit history file.

Agreements should always be in writing to avoid such catastrophes as paying off obligations, and payments not being recognized. One of the duties of a negotiation debt settlement agency is to ensure that the settlement agreed upon is in writing, and to ensure that the creditor conveys the new information to the appropriate credit reporting agencies. With the national consumer debt surpassing 2 trillion dollars, and the average households obligations above $18,000 (not including mortgages), it is no wonder negotiation debt settlements are in great demand. The best way to get out of this situation is never to get into it in the first place.

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