In many cases, debt negotiation can help reduce overall debt. The purpose of debt negotiation is to obtain from the creditor a reduction in the overall debt in exchange for either a lump sum payment, installment payments or some negotiated combination of the two. In many cases a successful settlement can occur and the credit can agree to forgive a percentage of the total account balance. This type of activity generally only applies to unsecured debts, and not those secured by real collateral such as real estate or liens on automobiles or other property. Unsecured debt can include medical bills, credit card debt, unsecured loans, automobile repossession deficiency, cell phone bills, private student loans, business debts and other types of creditors. Generally utility bills, mortgages, government student loans, secured debts, auto loans prior to repossession and the like cannot be settled through debt negotiation.
For the debtor, this can be very useful and avoids bankruptcy. From the perspective of the lender, they can negotiate for their debts and work with borrowers with less of a risk that the borrower file bankruptcy and the debts discharged in a bankruptcy action, in which case the creditor can risk losing all the moneys they are owed.
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Prior results do not guarantee a future outcome. Settlements vary based on numerous factors. We do not guarantee that your debts will be reduced by a particular amount or percentage, or that you will be debt free within certain parameters. Generally speaking settling debts will not improve your score with various credit reporting agencies. Forgiveness of debt over the amount of $600 may result in certain tax liabilities. We do NOT offer tax advice. Speak to your accountant or CPA to discuss the tax consequences of settlement. Call to learn more about credit card defense and settlement and credit law.
To schedule an appointment contact us by email or feel free to call our office at (516) 699-8411 or toll free at (800) 774-5976.