Debt negotiation is a process by which a debt settlement company works directly with a consumer's creditors to negotiate a reduced principal balance repayment of unsecured debts.
Is debt settlement the same as debt consolidation?
This is not the same as debt consolidation, which consists of obtaining a loan in an amount that would cover your existing debts and consolidating those debts into one loan repayment. Aurora debt settlement addresses each account individually and negotiates for a reduction in principal balance.
Important things to know about debt settlement
- Enrolling into a debt settlement program will not automatically stop your creditors from contacting you.
- A debt settlement program will not stop the accrual of interest, late fees and penalties. Your individual program will reflect these additional charges and they will be incorporated into the settlement plan.
- Your creditor may report the amount of forgiven debt to the IRS as discharge of indebtedness income, which you would then have to pay taxes on.
Can I negotiate directly with my creditors?
Yes, you may be able to negotiate with your creditors and we do not discourage you from trying. However many consumers prefer to use a professional debt settlement service or debt settlement attorney to avoid "going it alone" for many reasons.
- It can be very time-consuming and stressful to negotiate multiple accounts.
- You may prefer leaving delicate negotiations to an experienced negotiator who is more familiar with the process and the expectations.
Beware of debt settlement scams
On the other hand, there are many debt settlement companies doing business that will not represent your best interests. These types of companies will misrepresent how much they can reduce your debt, and not adequately disclose the likelihood that you would be sued if you take their advice and stop paying creditors.
As always, it is essential that you educate yourself on the process of debt settlement and should you choose to use a debt negotiation service, do your homework to make sure you are working with a reputable company.
For a free consultation about debt negotiations and debt restructuring in DuPage County, contact us toll free at 800-491-7493.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.