GIC East Africa

What Is Debt Negotiation?

Debt negotiation refers to a procedure where your lender “negotiated down” your debt by negotiating a total or partial repayment. This can be extended to any account that does not have outstanding debt. However, this can only occur after the account is successfully bargained.

If a negotiated settlement has been agreed upon, you will be required to pay back a percentage of what is owed, generally less than the balance originally. Depending on the type of debt and your financial situation, it may also be possible to not have monthly payments or repayment on account until it is settled in full.

What is the process of debt negotiation?

For consumer debt every lender has a different procedure for negotiating down their account(s). Most of the time, you’ll need contact the lender via telephone and discuss the matter once they have a clear understanding of your financial situation. You could be asked for proof in writing that supports your claim that you’re not able to repay the loan.

After you’ve explained the circumstances to the lender, they might be willing to come up with the terms of a repayment plan lower than the amount due. Even if you are able to reach an agreement, you’ll need to make payments towards the obligation.

In some situations, a debt negotiator may be required to call your creditors directly on your behalf. It is only required in the event that you are not permitted to contact a customer service representative by telephone, for example.

After your debt is negotiated down to a percentage of the initial balance due, you would then typically have between 36 and 48 months to repay. In certain situations, it may be possible for you to settle all accounts within the shorter timeframe.

What kinds of debts can you bargain?

A majority of consumer debt can be dealt with by a lender. Many types of debt which are repaid over time, such as personal loans credit card debt, student loans, and lines of credit can be discussed with the correct contact in the office of your lender.

The business debts are an entirely different matter completely. If you’ve got a loan with a business owner with whom you subcontract services, your chances of negotiating the debt slim to none.

It is crucial to remember that certain lenders might not agree to a repayment plan for your debt, especially those who have defaulted on few payments or if the account is being held in collections.

For more information, click debt negotiation services

What are the advantages of credit negotiation?

There are several benefits to debt negotiation. Depending on the lender, you may be able to get your entire debt balance be wiped out or have only a percentage of the total debt owed paid. This can provide some relief for cash flow until you have completed the repayment plan.

Debt negotiation may also allow for an extended period of time during which no payments on a monthly basis are needed. This is a great option if you can’t make monthly payments or want to spend more time trying to manage your finances.

If you’re in the process of filing for bankruptcy or wage garnishment, sometimes debt negotiation is the only choice.

Noting that debt negotiation can adversely affect your credit score in the short-term is essential as it can be reported to creditors as being a default. Based on the lender the debt could be sold to collection agencies or subject to legal action in the event that you are unable to pay your debts after an agreement is reached.