If you’re struggling to keep up with debt payments and are receiving unrelenting calls from collections systems, a debt negotiator can help. A professional negotiator can help create a personalized plan to repay your debts through a lump sum settlement or a payment plan.

For borrowers who aren’t in a position to repay the debts they owe in full, this can be a viable debt relief option. Read on to learn more about what debt negotiators do, how they can help, and things to keep in mind before you hire them.

What Are Debt Negotiators and What Do They Do?

A debt negotiator is a professional who can facilitate debt resolution or debt settlement. If you’ve defaulted on a debt, missed several payments, or are dealing with a debt collection agency, they can help you work out a solution to repay what you owe.

A good debt negotiator has experience working with all types of lenders, original creditors, and debt collectors. They can communicate efficiently with lenders, negotiate with them, and help create a plan so you can become debt-free.

Debt negotiators will typically start by analyzing your budget and suggest which debts to prioritize. They’ll determine the right negotiation strategy based on your income and will continue to work with you until your debt is settled.

What is a Debt Reduction Consultant?

Within the realm of debt negotiators, it's also important to be aware of debt reduction consultants. A debt reduction consultant is a professional, usually a financial advisor or counselor, who helps individuals or businesses manage and reduce their debt burdens. They typically assess a client's financial situation, including their income, expenses, and debts, to develop a personalized plan for reducing debt. This plan may involve negotiating with creditors to lower interest rates or payment amounts, consolidating debts into a single loan with better terms, creating a budget to manage finances more effectively, or providing advice on how to prioritize debt payments. Debt reduction consultants focus on long-term financial wellness and may provide continuing support and direction to clients in order to help them regain control of their money and become debt-free.

What Happens When You Negotiate a Debt?

While there are several ways to repay debt, understanding the difference between debt relief vs. settlement and how a debt negotiator works will help you determine the right option for your financial situation.

When you work with a debt negotiator, they’ll typically negotiate with your lenders to either set up a repayment plan that works with your budget or accept a lump sum payment. For example, if you owe $5,000 in credit card debt, you may be able to set up a payment plan with the credit card company where you pay $200 each month for a fixed period of time.

Another option is to settle the debt for less than you owe. For example, if you owe $5,000, a debt negotiator can convince the creditor to accept a lump sum amount of $3,000 instead. With either of these options, you’ll be able to pay off your debts faster and avoid bankruptcy.   

Key Benefits of Hiring a Debt Negotiator

While you can negotiate with lenders on your own, there are a number of key benefits of hiring a professional debt negotiator, especially when you’re dealing with a debt collection agency.

  • Debt negotiators can help you save a considerable amount of money by reducing the total amount you owe.
  • You’ll be able to become debt-free sooner with a clear path towards your goal.
  • You won’t receive any debt collector calls once you settle your debts.
  • You won’t have to communicate or deal with debt collectors since your negotiator will handle all communications.
  • You’ll be able to save money each month once you’re debt-free since you won’t be making monthly payments.
  • Debt negotiators can make the entire process easy, quick, and as stress-free as possible.

When To Hire a Debt Negotiator?

Here are a few situations where it makes sense to hire a debt negotiator:

  • You don’t want the stress or aren’t comfortable negotiating with lenders.
  • You’ve accumulated a lot of debt, have late fees, and several missed payments.
  • You don’t have the time to undertake DIY debt settlement.
  • You owe debts to multiple lenders.
  • Your debts are with a collection agency.
  • You think debt collectors are violating the Fair Debt Collection Practices Act.
  • You’re at risk of bankruptcy.
  • You want to save the most amount of money possible.

What Can a Debt Negotiator Do for You?

Knowing what a debt negotiator can do for you can help you determine if hiring one is suitable for your situation. Here’s what you can expect when you hire a debt negotiator.

Assess Your Financial Situation

A debt negotiator will start by assessing your financial situation to understand your budget, debt, and income. This will help you decide which debts to prioritize and how much you can afford to pay to which lender.

Debt negotiators will also use this information to negotiate with your lenders and create a plan that works with your income.

Create a Debt Negotiation Plan

A debt negotiator will create a negotiation plan based on your financial situation, budget, and goals. They’ll review your expenses and income to make sure you’ll be able to pay your bills while saving for debt settlement.

They’ll recommend the right negotiation strategy based on how much you’re willing and able to pay each month to settle the debt.

Negotiate With Debt Collectors

Negotiating with a creditor or a debt collector isn’t easy. A debt negotiator has experience and knowledge of how debt collection and debt settlement work and how much they’re likely to accept to settle your account.

They also have a deep understanding of the laws governing debt collection and negotiation activities, such as the Fair Debt Collection Practices Act (FDCPA) and the Consumer Credit Protection Act (CCPA). They’ll ensure that your lenders aren’t violating these laws and that your rights as a borrower are protected.

Make a Settlement Offer or Propose a Repayment Plan

Your debt negotiator will present a settlement or repayment plan offer to your lenders based on your situation and your budget. There may be a few rounds of negotiations, but you can typically save as much as 50% of your debt before fees if you work with an experienced negotiator.

Professional Debt Negotiation Services

If you’ve determined that you’d like to hire a debt negotiator, it’s important to do your research and compare options carefully to ensure you’re hiring the right person for the job. Here are a few things to keep in mind.  

Choosing a Debt Negotiation Service

Consider following these tips when choosing a debt negotiation service:

  • Research debt relief companies that are licensed in your state.
  • Search online or ask friends and family for recommendations if they’ve worked with someone in the past.
  • Compare the fees charged by different debt negotiators. You’ll typically pay 15% to 25% of enrolled debt.
  • Learn more about how settlement works and what’s involved in the process.

Evaluating Debt Settlement Companies

With so many debt-negotiating companies operating in the U.S., it’s important to evaluate your options carefully.

  • Make sure the company is accredited and licensed to operate in your state and there are no complaints against it with the state attorney general or consumer protection agency.
  • Choose a company that offers a free initial consultation so you can ask questions and gain a better understanding of your options.
  • Do not hire a company that asks you to pay an upfront fee.
  • The company should provide you with a service agreement before they ask for any personal information.
  • Make sure your debt negotiator gives you a timeline of the settlement.

Working with a Debt Negotiation Service

Once you’ve picked the right debt negotiator to work with, here are a few things to keep in mind to ensure that the process is smooth and stress-free:

  • It may take up to four years to settle your debt. Be sure to inquire about how much time it’ll take in your situation.
  • Make sure you have all the details before you work with a debt negotiator. Be clear about the fees, timetable, and how much you’ll pay in total.
  • Be sure to learn more about how a payment plan or settlement can impact your credit score.
  • Ask about tax consequences since any debt that’s forgiven by a lender is considered taxable income, and you’ll owe tax on it to the IRS.

Find the Best Debt Negotiator to Become Debt-Free in 2024

If you’re struggling with high-interest-rate credit card debt, personal loans, unpaid unsecured debts, and collection calls, it may be time to speak to a debt negotiator. Keep in mind that your lenders can sue you if you ignore your debts, which can result in wage garnishment and seizure of property.

You can avoid this by being proactive and taking care of your debt before it becomes a problem. Seek help from a debt negotiator and ask if they’ll be able to help you reduce the amount you owe.

If not, consider other options like getting a debt consolidation loan, enrolling in a debt management plan with a credit counseling agency, seeking personal finance education from a credit counselor, or another debt relief program.