Understanding debt negotiation companies

By Marrero, Chamizo, Marcer Law, LP,

Debt negotiation firms exist to help those who struggle with debts, such as credit cards and car loans. Florida residents who are struggling with debt might be interested in reading about how these types of companies work before using their services.

Debt negotiation companies help people settle their credit card debts by negotiating with creditors, such as medical offices and credit card companies. They represent consumers by working to lower their debt obligations. If they are successful, creditors agree to accept a lower payment from the consumer.

Some people might think that debt negotiation companies will get a person’s debt records erased from their credit report. However, information regarding an individual’s debts and late payments will most likely stay on the person’s credit record for the full time of seven years. In fact, the federal Fair Credit Reporting Act has agreed to let accounts remain on a person’s credit report, even after the debt was settled or paid.

When it comes to how debt negotiation companies work, many people might assume they require payment upfront. However, the Federal Trade Commission updated their policies in 2010 requiring debt negotiation companies to settle, negotiate or lower the terms of their customer’s debts prior to taking any fees from the customer and only after their customers agree to the terms of the settlement.

For many people who live from paycheck to paycheck, using a credit card is a viable option. However, if they are unable to make the monthly payments because they lose their job, develop a serious illness or experience an unexpected circumstance, they might find themselves in serious debt. A local attorney, however, could offer options to help a person who is overwhelmed with debt to get relief by eliminating their debts while helping them to keep their valuable assets.