You’re up to your eyeballs in debt. Collectors are calling every day and you can’t afford to pay them all at once. You’re even starting to wonder about that van outside your house, as it could be another collector!
If you’re overwhelmed with debt, you can reduce your interest rates and payments. Doing so involves a tactic known as “Debt negotiation.” You can negotiate your debts on your own or hire debt negotiation service to do so.
What are the benefits to negotiating debt on your own? Are there any drawbacks? Should you hire a debt negotiating service? Let’s find out!
Going it Alone
Negotiating debts on your own can be beneficial in the following ways:
- You know more about your financial situation than anyone else
- Privacy: you don’t have to disclose a job loss, medical issues or other contributing factors to a third-party
- You could save money by skipping professional help
As with any complicated financial matter, there are drawbacks to going it alone. These include the following:
- Investment of considerable time and effort to negotiate with creditors
- Mismatch: you’ll be an amateur negotiating with pros, including attorneys in some cases
Hiring a Pro
Hiring a professional debt negotiation service has the following benefits:
- Professional help: a debt consolidation service has done this before and knows what works
- Someone else will do the work, which will save you time
Of course, there are drawbacks to hiring someone else to do the job. These include the following:
- Creditors can still sue you unless the process is completely successful
- Fees can be substantial, reducing or eliminating the benefit of hiring a pro
- Using a debt consolidation service won’t completely protect your credit rating
- As with every other industry, there are unscrupulous debt negotiators to watch out for
Which is Better for You?
This is ultimately a decision that rests upon your personal financial situation. Yet, there are a few key takeaways to consider as you weigh your options.
On the plus side, negotiating your own debts can be the most efficient option if you’re a skilled negotiator and have some time to spare. You’d eliminate the middle-man and save some money in the process.
However, of key importance is the time and effort involved. The more accounts you have in arrears, the more time and effort will be required to correct the situation. As such, the situation could easily deteriorate if your lenders play hard ball, leaving you on the phone with Connie from customer support instead of doing something you enjoy.
Thus, if the thought of being transferred to a total of 25 people at 7 different creditors sounds worse than paying someone else to help you, you should consider hiring a service to negotiation your debt.
Just think of it as you would a court case. By researching relevant laws and arguing your own case in court, you could save a lot of money. This may be a wise option if you’re contesting a traffic ticket or other minor infraction. However, in a criminal case, you’d be going up against a prosecutor who makes a living off winning cases against people like you. So, you‘d probably want your own attorney if you were on trial for a serious crime.
Apply this scenario to your debt. If you have a small, relatively manageable amount of debt, you could go it alone without taking on too much risk. However, if your mailbox is full of late notices and you have a special ring-tone for each of your 11 creditors, you should strongly consider enlisting a debt negotiation service.