Debt Management Help with Debt Negotiation
If you are over your head and swimming in debt, the chances are good that you are not alone. Traditionally, when faced with the burdens of a heavy debt load, Canadians had to decide between bankruptcy and other options of debt help such as debt consolidation loans. The main issue with debt consolidation is that essentially it just creates more debt.
Canadians now have the option to settle their debts by approaching their creditors and negotiating a payout that is much less than the remaining principle balances and interest owing. This approach not only ensures that the harassing calls from creditors stop, but it reduces the need for bankruptcy or a debt consolidation loan and can save debtors thousands of dollars. Debt consolidation companies have known about debt negotiation and settlement for years; however, they make money off of the terms of their debt consolidation loans and therefore are unlikely to advise their clients to first consider negotiating a lower payment with their creditors prior to filing a claim of insolvency.
How exactly does debt settle work for debt management? Regardless of how you ended up in your current financial state, the problem is the same. You just can’t afford to pay off your debt in full. Under the terms of a debt negotiation the solution is as simple as approaching your creditors and explaining the situation. Be detailed in your financial hardships and explain that you would like to honour your debt, however, you just cannot afford to pay the entire balance. By negotiating a settlement of 50%, 25% and sometimes even 10% of the outstanding balance it is possible to successfully reduce both the payments and interest to an amount that is more manageable. Getting you out of debt quicker, while saving money.
Truthfully, the credit companies would rather receive part of what you owe instead of nothing, which is what they are likely to receive in the event of a bankruptcy or consumer proposal.
A word of caution, however, successfully negotiating your debts to a lower balance should be considered an alternative to debt consolidation Canada and bankruptcy as it does have similar negative effects on personal credit ratings. Even though the credit companies are happy to receive a portion of your outstanding balance instead of nothing, they may still report negative feedback to the credit reporting agencies which will have an affect on your credit score and can prevent you from obtaining credit in the future.
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