As the financial situation in many countries takes its toll on everyone, everyone is feeling the financial crunch, especially when it comes to debt. Anyone, nowadays, can fall in to debt traps set by collection agencies; so, if you’re suffering at the hands of stellar recovery inc – you are not alone, since being in dire financial straits is the way of things, during times of economic crises. Credit cards have become even more popular, and often becomes the pathway to the debt trap. However, it is important for one to be prudent in their spending, and also take precautionary steps to avoid getting into these debt traps. The big question now is, what to do when you are unable to control your borrowing? What are the solutions one can use to counter this negative circumstance?
What causes debt to begin with?
Credit cards are the major cause of debt for many people. They usually have very high interest rates that normally accumulate, especially when the debt is not serviced as agreed (hidden fees, etc.). To make it even worse, the overall amount of arrears generally increases when you fail to repay as scheduled; in this situation, the best way to deal with this state of affairs, is to consider a debt settlement/negotiation plan; this is a method – which has been very effective in assisting debtors in clearing up their debts – can resolve matters in a professional & stress-free manner.
How Debt Negotiation Works
The negotiation technique is used to help someone come up with a realistic way to pay back a debt (via a payment plan); in other words, it provides a settlement formula that results in a payment plan that is broken down in terms of dollars & cents. The best thing about this process, is that you will be capable to come out of debt much quicker, and have the ability to make payments (on a monthly basis), simplified. However, this will only be possible when your debt settlement company and the lender, agree on a figure that will be acceptable to all parties. A firm will act as your representative, because – at times – there could be bad blood between a lender and the debtor. For example, if you were harassed by Allied Debt Collections, and they kept pummeling you with phone calls (at all hours of the day) – you’re more likely to be belligerent towards them, during times of debt negotiations (further jeopardizing your chances in striking a favorable deal); so, in this instance, having a debt negotiation expert, speaking on your behalf, may very well be to your advantage.
The process will begin with the debtor making a decision to go for negotiations – by seeking help from an approved professional advisor/negotiator, whose area of specialization is in handling debtors. When you undertake this task on your own, it can be time-consuming and take a lot of effort. Once you have hired a negotiator, they will do a thorough review, and appraisal of all the financial statements; and present to you the amount of outstanding debt you had, before they initiate contact with the creditor.
After that, discussions will be done so that they can haggle back & forth, over how much you will be able to pay. If the lender accepts the terms that you want, you can expect a great reduction on your total balance! However, you must be prepared when they refuse to grant what you are proposing. When this occurs, you will continue making payments (as usual) to the negotiator; but they will not send the money to the lender; instead, they will create a care account (escrow) with the money you have given them. The same rules apply when you are in negotiations with a debt collectors. So, for example, if west asset management collection agency attempted to set a an agreement that steers from the conventional ways of debt negotiation, be very suspicious.
Once this is done, the creditor will continue to hammer out the terms with your negotiator, until they (hopefully) accommodate you & agree to your terms. The escrow account is meant to facilitate you in getting on with daily life, as well as, assist you in managing your resources, properly – after the discussions were finalized.
The bad news is, this process does not work out for clients that have filed for insolvency, or are awaiting a court case; and it does not work for borrowers that had spent borrowed money, to purchase luxurious items.
Typically, the negotiations normally start, when your debt has gone into arrears, for a period of over three months. They don’t have a specified time-line on when the talks end, because it will depend on the way the lender or debt collector will react to the settlement that you proposed.
The biggest demerit you will have in this, is poor ratings on your credit reports, and the company you hire will also charge for their services.
Overall, to successfully stave off imminent bankruptcy and getting your credit card debt out of arrears – a debt settlement/negotiation may be the best option for you!