Debt negotiation involves making an arrangement with your creditors to settle your debt for less than the full amount owed. Debt negotiation can occur with many different types of debt, from tax debt to student loan debt to credit card debt. Generally, the easiest type of debt to negotiate or settle is credit card debt, since it is unsecured. However, if you are in over your head in debt, you may be wondering how long debt negotiation takes.
Typically, most creditors will not agree to settle debt with you unless you are late on your payments. After all, if you are able to make monthly payments on time, what incentive do they have to agree to take less? In fact, credit card companies tend to like people who can just barely pay the minimums, as these customers are very profitable since it takes them years to pay off debt and the card companies make money in interest the whole time.
Most credit card companies will begin negotiating when you are about two to three months behind on your payments. So, the timeline for how long debt negotiation can last may be at least this long. If you wait too long, however, the credit card company may sell your debt to a collection agency... then, you'd be negotiating with collectors instead of your creditors.
Once you have fallen behind on your payments, the process generally involves:
At this point, if you agreed to a large lump sum payment, then once you get the agreement in writing, you make your payment and the debt settlement is over. If you agreed to a payment plan, the settlement is over once the plan is completed.
Working with an experienced debt settlement attorney can help to streamline the negotiation process and can often make debt settlement faster and less expensive.