Are you living in New Jersey and are considering the possible option of debt negotiation to escape what may be a very detrimental debt situation? If so continue reading. This will be a rather long article as I would like to explain the debt negotiation process, also known as debt settlement, and also why it would be much wiser to find a New Jersey debt negotiation law firm to help you get out of debt as opposed to a standard debt negotiation company.
For starters what is debt negotiation? Debt negotiation is a process in which a debtors’ accounts will be negotiated for the payback of a much lower amount than what is currently owed to the creditors; the end result of a successful debt negotiation is a debt settlement, hence why this process gets called by both names. There are some great benefits to this process, such as a tremendous savings of both money and time; however there are also some drawbacks that consumers must be made aware of before starting this process, which I will explain throughout this article.
Before I go into the many reasons why it is better to employ a law firm in this matter over a company you must understand that New Jersey has some pretty tough regulations on the debt negotiation/settlement industry. In NJ the law prohibits any company outside of the NJ state lines to assist a NJ citizen in debt negotiations. There are many guidelines that must be adhered to in order for a company to legally negotiate someone’s debts, even if they are conducting business in New Jersey. The sad fact is the vast majority of companies are not set up properly to legally do the job. This leads to many problems for consumers which I will get into below; thus making a law firm a much better option.
This now brings us back to the debt negotiation process. In order for any creditor to be willing to negotiate and settle an account, the account must fall into a past due status. Why? Well the answer is pretty simple if the creditors feel you are in position to maintain their high monthly minimum payments that’s exactly where they would like to keep you. The credit treadmill is what this process is often referred too; just paying the minimum will keep someone in debt for over thirty years and cost them in interest over five times the original balance. So it is essential to fall behind on your payments for the creditors to be at all willing to talk in terms of settling your debt.
As one may assume this will have a negative effect on the credit score there is simply no way around that. For those debtors already falling behind this is mute point, however for those who are current their score will be affected. So if you are speaking with any debt negotiation companies and they are not disclosing this information to you then you would be wise to hang up with them. A lot of shady operations simply do not go into this detail.
Now it is natural to be somewhat put off by hurting your credit score, but take into account that once the settlements start going through this will have a tremendous positive effect on the credit score. The reason being over thirty percent of the FICO credit rating is made up of the “debt to credit ratio” which will be in a much better balance after the accounts have been settled out.
One of the other negative effects of falling behind on your credit card cards is you will no doubt be receiving calls from collectors to collect on the debt, and there is only one way to avoid this and that is with a law firm. A New Jersey debt negotiation law firm can legally stop the collectors from calling and harassing their clients, whereas a standard debt negotiation company does not enjoy this benefit. So if you are speaking with a company and they say they have the power to stop the calls ask them how. In most cases they will mention sending out a “cease and desist letter” which in many cases will only stir the hornets nest. They simply do not have the power to legally stop collection calls and those that claim they do may be nothing short of a scam operation so be weary.
Onto the next side effect of falling behind and this is concerning the issue of getting sued. You must understand at any point once you fall behind on these debts the creditors have the legal right to take the debtor to court in an attempt to collect the debt. Now before you get completely scared you must realize that this is not the commonplace for the creditors; it simply costs too much money and time with no guarantee of collecting money even if they were to obtain a judgment.
A debt negotiation law firm however has the legal right to continue negotiating a law suit outside of court after the debtor has been summoned. This is a huge benefit to the client, in the vast majority of cases the law firm will be able to reach a settlement without the debtor ever having to step foot into a courtroom. On the other hand a standard company cannot contact a creditor after they issue the suit, thus leaving the debtor trying to scramble and figure out what to do, often leaving the client with a judgment. This is perhaps one of the biggest advantages a law firm has over a company!
This brings me to another very important point to consider when deciding on debt negotiation, especially if you’re considering whether to use a law firm or a company. The federal regulators have been cracking down very hard on companies that are not set up properly, and are promptly shutting them down. So what happens to the clients of these companies that get shut down? In many cases they are left with no company to negotiate their debts and are now set back for a large sum of money; because in most cases the company will not have the capital to reimburse its clients for fees that have already been paid. This nightmare scenario happens way too often, thus making the advantage of hiring a law firm with a sound working knowledge of the laws in your state even more important.
I know in this article I have pretty much been discussing the negative aspects of New Jersey debt negotiation, but that’s because I feel it’s important for the debtor to understand everything before using this as their debt relief method. But you must understand the great benefits of debt negotiation. Many debtors find themselves debt free in a little over two years and end up saving over half of what they currently owe to their creditors. This is such a stark difference from the minimum payment credit treadmill. This process has been working wonders for millions upon millions of Americans stuck in debt, especially those very negatively affected from the recent economic recession.
I really hope after reading this article you feel enlightened to how this process works and how it can benefit you in your particular debt situation. If you would like to learn more and see if this process can help you then click on the link below.
New Jersey Debt Negotiation NJ
