Is Debt Negotiation Bad?
Is debt negotiation bad? Well, yes and no. It all depends on your
situation and how you view the negatives (and positives) of debt
Educating yourself about the ins and outs of debt negotiation is
a good first step. Please note that the term ‘debt negotiation’
is also known as debt arbitration or debt settlement.
For starters, a lender has little motivation to arbitrate
anything less than the full amount unless the person is two to
three months behind in payment.
To answer your question is debt negotiation bad? You need view it
as a last-resort measure. The truth of the matter is it’s one
step away from declaring bankruptcy.
Remember, your lender gave you the money or property in good
faith. He or she has every right to expect that the loan be
repaid in full. Morally, you should do everything that is within
your power to pay your debt(s).
However, this is not always possible and despite how much you
would like to repay the loan in full you just can’t – not now and
not in the foreseeable future. This is where debt negotiation
comes into play. It may be your only logical course of action.
And, in the case of an old debt that you’ve long since forgotten
about, debt negotiation would be the best way of dealing with it.
There’s no point in keeping a small blemish on report when a
little negotiation can easily turn things around.
But if you find yourself overwhelmed with your current debt load,
credit counselling should instead be your first action step. A
credit counsellor will give you some tools and suggestions for
reducing your payments.
Debt consolidation may be more appropriate. A credit counsellor
will walk you through the debt consolidation process. In a
nutshell, it means creating a whole new loan for a longer period
of time. This would hopefully lower your payments enough so you
can get back on track.
Please know however, that debt consolidation can be nothing more
than a way of putting off the evitable. It really does little to
correct the problem. That’s why many people come back to debt
negotiation as a way of getting out of their financial problems
and starting fresh start.
If you’re determined to pay of your debt(s) and turn over a new
‘financial’ leaf you may wish to contact your creditors yourself.
By doing so, you may be able to negotiate a lower interest rate
or a more realistic repayment plan. This is known as self
So, is debt negotiation bad if you really need it? The bottom
line answer is no. When your debt is very delinquent, negotiation
is often in your best interest. If this is the case, now is the
time to either consider self arbitration or seek out the help of
a debt negotiation company.
Although a debt negotiation program will lower your credit score
for as long a you’re in the program, you’ll also find that most
debt negotiation companies require the creditor to make sure that
the final credit report reflects the account is now paid in full.
Therefore, once your account is settled you will no longer have a
A number of debt negotiation companies also include a credit
repair service as part of their debt negotiation program. This
repair service removes any negative items caused by the program.
Although it is part of the program there are additional fees
associated with this service.
Is debt negotiation bad? Ultimately, you’re the best person to
judge whether debt negotiation is right for you or if it’s in
your best interest to consider another alternative such as debt
This is where negotiation and your question, “Is debt negotiation
bad?” comes in. Debt negotiation is bad in that it means the
complete destruction of your credit history.