Debt Negotiation

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Debt Negotiation Definition
A dialogue with a creditor in attempt to agree on a reduced interest rate and or principal balance to be repaid. Debt Negotiation is a process where a debtor or agent on behalf seeks financial concession from a creditor.

Debt Negotiations
Debt negotiation is entertained at the creditor's discretion. Debt negotiations are voluntary and creditors are under no obligation to negotiate or even participate in any dialogue about consumer debt negotiation. Debt negotiation may occur where the creditor perceives an incentive to do so. Consumer debt negotiation is made practicable in the case of unsecured debt because the creditor risks losing money if the consumer defaults.

debt negotiations

The term Debt Negotiation typically refers to:

1. An unsecured debt negotiation settlement or service alternative known as: Settlement.
2. An unsecured debt negotiation program or plan known as a: DMP.
3. A personal debt negotiation program or: Do it yourself debt negotiation.

With do it yourself debt negotiation you attempt to get the creditor to exchange an agreement directly with yourself in writing.

1. Debt Negotiation Settlement aka Debt Settlement (Principal Amount)

Debt negotiations with creditors over unsecured debts, principally debt negotiations over card debt.

debt negotiationsA debt negotiation settlement is sought by a service provider acting on your behalf to liaise and negotiate with your creditors over the repayment terms of your debt, but most notably over the total balance that you must repay. The debt negotiation settlement service seeks to get your creditor to accept a reduced balance. A debt negotiator might for example get the balance owed down to 50% of the original.

If the debt negotiator is successful you win partial forgiveness or partial balance cancellation. The debt negotiator does not seek to, nor cannot rid you of the entire debt. Debt negotiation is about making a repayment situation more affordable. The debt negotiation settlement approach is a risky alternative that may be relevant in some cases.

The debt negotiation settlement service is one of three core options or alternatives for Debt and Consolidation.

It is only applicable to consumer unsecured debt types. Various companies, agencies and organizations offer debt negotiation programs. One option is a debt negotiation attorney. A debt negotiation attorney may work for a debt negotiation firm or law firm specializing in debt negotiation programs of this type.

Attorney debt negotiation has the advantage that legal advice is on hand. In many cases however, attorney debt negotiation is not what you get from a debt negotiation provider organization. It should however be noted that good debt negotiators need not be a debt negotiation lawyer or member of the legal profession.

Various skilled debt negotiators may hold International Association of Professional Debt Arbitrators, IAPDA debt negotiators certification. Neither attorney involvement nor IAPDA certification guarantees success with negotiation. Debt continues to accrue interest until any successful negotiation.

Debt situations can be made worse if a favorable outcome is not achieved. The fact is that such debt negotiations program success cannot ever be guaranteed. Debt negotiations designed to achieve settlement are risky. How the process works and the possible outcomes that you face should be clearly understood. To learn about the debt negotiation process that takes place with settlement and the pros and cons of this type of debt negotiation read up about Debt Settlement and follow our program and advice articles.

2. Debt Negotiation Plan DMP (Interest Rate Payable)

Debt Negotiators The debt negotiation program known as a DMP has less risk attached and debt negotiations under this service approach have a lesser impact on your credit report than settlement. Debt negotiations take place to reduce the applicable interest rates and to secure fee or penalty waivers where possible. To learn about debt negotiation under the DMP service approach see our article Debt Management Plan


Under the Plan/Program approach to debt and consolidation, debt negotiation takes place on your behalf with unsecured creditors like card companies. The goal of debt negotiation here is to secure a reduction of the interest rates applicable to your debt. Unlike settlement, this debt negotiation program does not seek to reduce the principal amount or balance owed, only the interest rate charged.

3. Personal Debt Negotiation

You may attempt a do it yourself debt negotiation with creditors. Realize that with a do it yourself debt negotiation you will be mirroring what service providers do - and therefore it is essential that you understand each service process and implications. First decide on what your debt negotiation goal is according to service type. Is it to reduce: Principal Amount (The Debt Settlement Service Type)  or: Interest Rate Payable (The Debt Management DMP Service Type). You should not attempt debt negotiation until you have an understanding of these service types. In the case of settlement, you will need to write a debt negotiation letter in order to lay out your case. A good debt negotiation letter is brief, factual and straight to the point. It is not a rambling attempt for sympathy that may not even be read. Look for more detailed do it yourself debt negotiation advice under each separate service articles on this website. For example, principal debt negotiation advice and debt negotiation letter under our "Settlement" articles.

Consider how will my debt negotiation affect my credit score and how will my debt negotiation affect my future borrowing ability, but focus primarily on solving the problem. All debt negotiation solutions take time. Settlement and DMP debt negotiation solutions take on average, two years and four years respectively. Learn about all your options on this website. More information on debt negotiation business.

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