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Debt Negotiators


Debt negotiators are sometimes funded by the credit industry. The reason is that a creditor would much rather work out a deal to get as much of what he is owed as possible, plus interest, than to have to discharge much of the debt due to the debtor's inability to pay.

Some believe that debt negotiators are the equivalent of a magic bullet that can miraculously correct your credit standing.  And that is, no doubt, what many of these companies want you to believe. In many cases, however, that is decidedly not true.

Are Debt Negotiators In Your State Regulated?

For example, most people are not aware that debt negotiators, debt relief programs, and debt settlement attorneys are not necessarily regulated. If you live in Connecticut, you are in luck as their legislature passed a law in 2009 that required any company operating in the state for the purpose of negotiating debt has to be licensed. They are regulated by the state.

But all states do not have this protection. And even in the states where the industry is regulated, the quality of the regulation varies greatly. The best approach to take when hiring one is these companies is to take a buyer's beware attitude.

Debt Negotiators Do Not Necessarily Erase Negative Comments On Credit Reports

Another thing that you should be aware of is that just because debt negotiators may reduce your debt, it does not necessarily mean that negative comments will be removed from your credit record. Even after paying off your debt you may be surprised to find many negative comments on their credit report with no improvement in their credit rating.

Some debt negotiators are non profit while others are pay for service. As you do your research, you will find that some of the paid debt negotiators charge a great deal of money and that their main intent is to get as much of your money as they can with only a small emphasis in fixing and protecting your credit.

What To Look Out For When Choosing Debt Negotiators

That's why the most important thing when working with debt negotiators is to do your due diligence and find out as much about the debt negotiating company before you commit to them.

The second most important thing to do before signing a contract with debt negotiation services is to read the find print. Failure to do so could very well lock you into a contract with a company that has made only minimal commitments in writing to do what you want done.

Many people who have registered with the wrong debt negotiators have found themselves a few years later in worse financial shape than when they started.

You should also check the filings of the Federal Trade Commission (FTC) before committing to a company. Over the past decade they have taken many companies to court for misrepresentation, fraud, failure to deliver services, and the like.

Finding an FTC filing against a company, while not proof that they are scammers, is nevertheless a red flag against giving that company money to perform debt negotiating for you.

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