West Palm Beach Bankruptcy Lawyer

Is Debt Negotiation Right for You?

Debt negotiation is the process of contacting your creditors to work out an agreement about how you can repay your debts. Many people on the verge of bankruptcy are tempted by this idea because it seems like a quick way out of their difficult situation. They may have also heard that creditors will forgive anywhere from 10 to 60% of the debts owed them. The truth is that while debt negotiation can be a good option in some circumstances, it does have its pitfalls.

Hardship Plans

Many people who owe large amounts of money initially try to work things out directly with their creditors. It is true that many banks offer hardship plans for people who cannot make minimum payments due to difficult circumstances. Unfortunately these plans are rarely a big help.

If a debtor is lucky enough to even be offered one, his interest will be reduced for six months. During those six months very few people are able to pay back their original debts, let alone accumulated interest.

Debt Negotiation Scams

Some people realize the difficulty of explaining their situations to their creditors, so they contact a debt negotiation or debt settlement company for assistance. Many of these companies make very enticing promises about getting debts reduced and helping clients avoid bankruptcy. The problem is that these companies can become just another bill to pay at best.

At worst, debt negotiation companies are revealed to be frauds. Some unscrupulous people are willing to take a few payments from clients and then simply leave them worse off than they were before. When considering debt negotiation, it is very important to check every prospective company with the Better Business Bureau.

Contact a West Palm Beach Bankruptcy Attorney

To learn more about ways to get out of debt, contact West Palm Beach bankruptcy lawyer Eric Klein at 561-353-2800.