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Debt negotiation is a great opportunity for individuals to avoid bankruptcy and eliminate thousands of dollars in debt; however, it's not for everyone. Here are some of the main criteria that make you eligible for one of these program.
1. You have a legitimate hardship. A hardship explains your financial situation and why you are unable to pay your creditors. Reasons include medical problems for you or a family member, sudden emergencies, deaths in the family, divorce, loss of job or a decrease of pay, etc. The most important aspect of a hardship is that it does indeed provide a plausible explanation for your situation. Your hardship is extremely important because a creditor may not be willing to settle an account if they do not find your explanation credible. 2. You can save at least 1.5% of your total debt monthly. No matter how good of a debt negotiation company you hire, if you do not have money to pay the settlements, you will never get out of debt. Debt settlement companies typically require you to save about 1.5% of you debt per month in order to become debt free in 36 months. If you can not save close to that amount monthly nor have access to a lump sum, you are not a good candidate for debt negotiation. It is very important that you are realistic about you financial contributions to the program from the beginning, otherwise you could end up in more problems later on. 3. Your recent credit activity is not consistent with your financial problems. It is not uncommon for individuals who are planning to enter into a debt elimination program to run up their credit cards just before joining (for example, buying a 60 inch plasma the month before you enter a debt negotiation program). Creditors watch out for this and may refuse to negotiate an account if they feel that the debtor is taking advantage of them. 4. You are committed to finishing the program. If you sign up for a 3-year plan, you need to be committed to the program for the entire 3 years. It is not uncommon to find someone who after 6-8 months stops making their monthly savings deposits. They begin to spend that money instead of dedicating it to the program. In other cases, clients simply drop out of the program. This is extremely damaging because creditors may feel misled and often become very aggressive toward the debtor and his or her accounts. The easiest way to fail in a debt negotiation program is by not completing it. If you are considering hiring a Debt Negotiation Company, you should speak to a debt negotiation professional who can better orient you and provide you with more in-depth information regarding your personalized situation. Scott Wallitsch is a certified IAPDA debt arbitrator for DebtorSolution. He provides Debt Settlement and Debt Elimination advice to clients who are looking to become financially free and economically independent. |
