Debt Negotiation Attorney Serving Silver Spring, Hagerstown & Frederick, MD

Negotiating a Lower Settlement for Debts

When you find yourself with unmanageable debt, but want another solution than filing bankruptcy or debt consolidation, then debt negotiation, or debt settlement, could be the right alternative. Bankruptcy may be a last resort, or you may not want to have a bankruptcy on your credit report.

Debt negotiation can allow you to pay your creditors less than what you actually owe and completely settle the account. This can be a relief if you are behind in your payments and you don't have enough income or other resources to pay them.

Of course, you must get the agreement of the creditors to accept a lower amount. You may have lost your job, or have some kind of emergency that depleted your savings. A Silver Spring bankruptcy attorney can help you with debt negotiation and get you back on the road to solvency.

Benefits of Debt Negotiation

If you file bankruptcy, your creditors will most likely not receive any money, or very little, from you. So for them, a debt negotiation is a far better alternative. They have a real incentive to negotiate a settlement. When an amount to settle the debt is agreed upon, and you pay that amount, the debt is considered paid in full. Your credit report will indicate a balance of $0 owed. Additionally, the creditor cannot try to collect any more money from you.

Other benefits of debt negotiation include being able to pay off your debt faster, without often having to pay any late payment fees. It can put a halt to the barrage of calls you may be receiving from creditors, which just add to the stress when finances are in trouble.

Often, the right negotiation can reduce how much your credit is impacted. Your credit score will have already taken a hit, but once your negotiated settlement is paid, rebuilding your credit can begin.

Can I negotiate all my debts?

Many kinds of debt can be negotiated, but there are some exceptions. For example, most secured loans (houses, cars, boats, etc.) are only negotiable if you are willing to give them up to the creditor. Student loans are not negotiable if they are government insured. But unsecured credit cards, medical bills, retail credit cards, personal loans, and even bounced checks often can be negotiated down.

The IRS is also amenable to debt negotiation in some cases. But you should know that the IRS also would tax any amounts that are forgiven by creditors. If a creditor reduces the amount you owe, for example, by $5000, then the IRS considers that $5000 as taxable income.

It isn't always the best solution to attempt debt negotiation. It is a good idea to consult with an attorney who can assess your financial situation and guide you down the best path for debt relief. Some of the circumstances that make debt negotiation applicable include not being able to make payments for the past three months, loss of job, or being threatened with a lawsuit from a creditor, to name a few.

Some factors that will determine whether a creditor is willing to negotiate include the amount you owe and how many payments you have missed. There is skill involved in communicating to creditors and collection agencies during the negotiation process, which is another reason you should consult with someone who is experienced in debt settlement.

Interested in debt negotiation? Call Attorney David Cahn!

My firm is dedicated, experienced, and diligent in helping our clients get out from under crushing debt as well as resolve rights violations in cases of creditor harassment. At the Law Office of David Cahn, we know the law and how to negotiate the best settlement possible.