With the average consumer debt total in Canada reaching over $27,000 as of the 2nd quarter of 2013, Canadians are feeling a stronger push than ever before to reduce and eliminate their debt before it gets out of control. In addition to traditional debt relief options such as credit counselling and debt consolidation, many Canadians are also considering debt settlement.
Debt Settlement: The Basics
The basic idea behind any debt settlement program is to negotiate with creditors to consider your debts paid in full for less than what you actually owe. Debt principal reduction is always the goal. For example, debt settlers might negotiate with a creditor and get the creditor agree to accept $1,000 as payment in full instead of the $5,000 that the debtor actually owes.
One of the most common questions asked about debt settlement is:
Can I negotiate a debt settlement by myself?
The Advantages of Professional Debt Settlement
1. The Right Direction—Debt settlement has many benefits, but it is not the right solution for every debtor. Sometimes, credit counselling or debt consolidation is better. You might even benefit more from a consumer proposal or personal bankruptcy than from debt settlement. A professional can assess your situation thoroughly and make sure that you only enter debt settlement if that is the best option for you.
2. Expert Negotiation—Your creditors will always try to get the most money possible from you when you are negotiating a debt settlement. To make sure you get the most favorable terms and do not end up paying too much to settle your debt, it is helpful to have an expert debt negotiator on your side. An experienced professional will get better settlement offers for their clients so that they end up paying far less in debt principal than they might pay if they try to negotiate on their own.
3. Payment Flexibility—Debt settlement is unique in that most creditors want only a lump sum from you in order to settle a debt. In other words, if you negotiate the terms yourself, you will likely be unable to get them to agree to a payment plan. However, if you qualify for debt settlement through a professional debt settlement company, they can often set up a payment plan so that you do not have to hand over many thousands of dollars to your creditors all at once.
Before You Try to Negotiate Yourself
Prior to negotiating a debt settlement yourself, you should consult an expert to learn what your best options are. For a free, no-obligation debt consultation to help you determine if debt settlement is the best option for you, fill out the debt relief form on this page.