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Debt relief: The pros and cons of debt negotiation

Times can be tough financially, especially following the holidays, and debt loads may overwhelm some Louisiana consumers. While many people know about the protection offered by personal bankruptcy, some prefer to try alternative options before filing for bankruptcy. Fortunately, help is available to guide them through choosing other debt relief options.

One such option is debt negotiation by which a consumer can pay his or her debts off within two to four years. This process typically involves the use of a company that negotiates better terms and reduced minimum payments on behalf of the consumer. An accomplished negotiator may be able to get the monthly debt load reduced by as much as half. During the negotiation period, the consumer makes no payments, allowing time to build up savings in a special account for use to pay reduced payments to creditors once negotiations are finalized.

Debt negotiation has certain disadvantages. During the time the debt negotiator spends in talks with creditors, the missed payments will accrue interest, and adversely affect the consumer's credit score. However, getting to a stage where debt negotiation is necessary might have taken a while, during which time limited or late payments might have already had an impact on the individual's credit score. If the negotiations take too long, creditors may even decide to start debt collection actions -- including the pursuit of a lawsuit against the consumer for the owed amount.

To limit the damages brought about by the consumer's need for debt relief, the skilled support and guidance of an experienced bankruptcy attorney is often helpful. A Louisiana lawyer can assess the circumstance and provide valuable advice about the most appropriate debt relief option to pursue. When none of the alternative debt relief options are suitable, Chapter 7 or Chapter 13 bankruptcy might help. Whatever method the client chooses, the attorney can protect the client's rights and help forge a path toward renewed financial stability.

Source: wtvm.com, "5 things to know about your debt negotiation partner", Andrew Housser, Accessed on Jan. 6, 2017

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