How Long Does Debt Negotiation Last

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.

The Timeline

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.

The Process

Once you have fallen behind on your payments, the process generally involves:

  • Sending a debt settlement letter. This is a letter in which you propose an agreement wherein you pay back less than the full amount owed. You can agree to make a single lump sum payment- which creditors tend to prefer since they get the money up front- or to make a series of payments over time towards a reduced amount.
  • The credit card company can accept your settlement offer, deny it, or respond with a counter offer. They may also ask for financial documentation, which you can provide if you are comfortable with doing so (but you should not give them access to your bank account)
  • You can then come to an agreement with the credit card company

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.

Getting Help

Working with an experienced debt settlement attorney can help to streamline the negotiation process and can often make debt settlement faster and less expensive.

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