Negotiating A Debt Settlement

Have you ever thought about debt negotiation? This is one possible way to reduce your debt if you are having financial difficulties.

For you to get your lender to negotiate debt, you must have a valid reason. The only reason a lender will consider debt negotiations is because you're having a financial hardship. Then they will request proof of the changes in your financial condition.

Once it is established that you are really in need of financial relief, your lender will look over your loan. Here are a few things that a lender can help with:

1. Interest Rates - This is the first thing a lender will review. Many times there is room to lower interest rates to a point where it will lower your payment. Even though you are not reducing the actual principal, you are indirectly reducing debt by not paying as much interest. In the debt negotiation process this is one of the easiest areas to get concessions on from your lender.

2. Principal - This is one area that is a little harder to get reduced. For a lender to reduce the principal owed, they must feel your situation is critical. By this we mean you are on the verge of bankruptcy. Serious debt negotiations in this area take place when your lender sees you are in serious financial trouble. At this point there thought is "a little is better than nothing".

There is one other way to negotiate principal, it's called a "lump sum settlement". If you have cash, or access to some, your lender will be more willing to talk principal reduction. It is realistic to enter debt negotiations with your lender thinking fifty per cent reduction. You can start even deeper and work your way back to the figure you have in mind.

3. Contract Assurance - Something that has cropped up recently is debt verification. With all the shuffling of original loan documents and the buying and selling of loans, lenders voluntarily negotiate debt. You might even be approached, to your surprise, by your lender with a more favorable offer. This is happening mostly with mortgages since these are the loans lenders have mishandled.

Outside Help

To some people debt negotiation is awkward, especially when it's their debt. If your situation is complicated you should consider a lawyer. If you are like most people and over extended, then you can negotiate debt yourself or hire a debt settlement company.


About the Author:

Angela Tyler has good experience in the finance field, who has been writing on various related topics such as debt settlement & bankruptcy attorneys to help people understand the Debt Settlement process and help them get out of debt and remain debt free.
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