Debt Negotiation -- California

Are you one of many California residents who are struggling to make payments on your high-interest credit card debts and wondering about debt negotiation or some other form of much-needed debt relief? If so, you can breathe easier because there is help available - in the form of debt settlement or debt negotiation, debt consolidation through a credit counseling agency, or even bankruptcy.

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As a form of debt relief, debt settlement lets you settle or negotiate with creditors for a reduced amount of your credit card debts. On the other hand, debt consolidation is a process where you typically combine your high-interest credit card debts and other unsecured debts into one, more affordable, and more structured payment made to a credit counseling agency. These days, both methods have become popular alternatives to bankruptcy - which has a more damaging and longer lasting impact to one's personal credit.

How Debt Negotiation Works

As mentioned earlier, debt settlement is a proven and legal way to help many consumers reduce their credit card debts. When you enroll in a debt settlement or negotiation program, you are hoping to settle or negotiate with your creditors for significantly less than what you originally owe. However, while it is a smart financial move for many to negotiate their debts, it's important to know the potential risks.

As the term "debt settlement" suggests, credit card companies are certainly not legally required to "settle" or accept your settlement proposal. In many cases, you will be advised to stop making payments on your credit cards to save up funds, over a period of time that you can later use to make a reasonable settlement offer. In these cases, creditors may threaten to sue if you default on the terms of your credit card agreements.

In addition, many consumers who default on the terms of their credit card agreements typically see a decline in their credit scores. Yet, in spite of the risk involving one's credit, debt settlement remains a popular debt relief alternative to bankruptcy - which, as mentioned previously, can have a more serious and longer-lasting effect on your personal credit.

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Debt Relief Alternative: Debt Consolidation

If you are a California resident struggling with credit card debs, you can also find relief through a process known as debt consolidation, or a debt management plan (DMP). Debt consolidation typically involves "consolidating," or combining, your multiple, high-interest credit card debts into a single, more affordable monthly payment made to a credit counseling agency.

If you enroll in a debt management plan you will work with credit counselors who will review your outstanding financial obligations and find out how much money you can reasonably set aside toward paying off your debts. Once they have all the financial information that they need, credit counselors will typically make proposals (on your behalf) to creditors requesting a reduction of interest rates, or waiving or elimination of any late fees and other penalties.

Creditors that agree to the proposals are entered into the debt management plan. It's important to understand that while it is the credit counseling agency's responsibility to disburse funds to creditors, it is your responsibility to make sure that you have money available in the account set up for your monthly payment. Many reputable credit counseling agencies can even provide you with a due date (the date that they draw money from your account) that takes into consideration, for instance, when you get paid or have the funds available in the account.

The bottom line is, if you are struggling with debts, there is help available. It is smart to do your due diligence and understand all your debt relief options - regardless of whether you choose debt consolidation through a credit counseling agency, or a debt negotiation - settlement program. A reputable debt relief agency can help you understand all your options, and get you started on a path to regaining control of your life.

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