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Debt Negotiation

Debt negotiation is a type of debt consolidation for those whose debt situation is more severe. Find out how debt negotiation can help you if you have a large amount of overall debt.

About Debt Negotiation

For those whose debt situation is more serious and urgent, debt negotiation may be a better fit than debt consolidation. You can apply for both services when you get a debt consolidation quote, and we will help you decide which service is right for you. Debt negotiation is meant for people who have a high level of unsecured debt, typically $20,000 or more, and are not currently making payments on these debts. Thus, debt negotiation is sometimes described as an alternative for those in danger of bankruptcy. It's important to remember that, unlike debt consolidation, debt negotiation will have an initially negative impact on your credit for reasons we'll explain.

Who Is a Good Candidate for Debt Negotiation

You should apply for a debt consolidation quote for debt negotiation services if you meet any of the following criteria:

  • You have dropped out of a debt consolidation program
  • You can't make your minimum debt consolidation payments
  • You have a large amount of debt (over $20,000)
  • You have not paid on your outstanding debts in the past three months
  • You are considering bankruptcy
  • Your accounts are in collections or on the verge of charging off
Are you a good candidate for debt negotiation?

Debt Negotiation Process

If you apply for a debt consolidation quote and decide on debt negotiation services, the process works a bit differently from that of debt consolidation. Here is what will happen:

  1. You stop making payments to your creditors (if you were making payments). You do not make any payments to your creditors while participating in the program. This is so your debt consolidation company can negotiate a reduced amount of debt for you.
  2. You debt consolidation company negotiates to reduce the amount of your debt. The consolidation company will deal exclusively with your creditors, so you don't have to. The company will work to have your debt reduced by an average of about 50%.
  3. While negotiations are in process, you make payments to a special account. While negotiations are taking place, your debt consolidation company will either have you make monthly payments to them that they store in a specially designated account or they will have you save the money in your own account.
  4. Once a settlement is agreed upon, you make one lump-sum payment to your creditors. You take the money you've stored in your account to make one payment to your creditors to become debt-free. Your accounts will be marked "paid in full." If you have any questions, please visit our FAQ pag.