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Choosing debt negotiation

On Behalf of | Sep 13, 2023 | Bankruptcy |

If a person is unable to pay their debts, they may benefit from a process called debt negotiation, also sometimes called a debt settlement. With debt negotiation, the debtor settles with the creditor to pay a portion of the debt. If the debtor pays the agreed amount, the creditor forgives the remaining debt.


It’s important for the debtor to take an inventory of their income and debt, which will help them know how much they could pay toward a debt negotiation. Once the debtor contacts the creditor, the creditor may request evidence to support the debtor’s financial situation. The creditor may request the debtor’s income and tax statements, for example.

Even with these documents, the creditor may request a higher payment than the debtor can afford. The debtor may need support from a qualified professional to assist them in negotiations with the creditor. This process can be complex and lengthy.

Once the creditor agrees to a settlement amount, the agreement should be put in writing. Then, the debtor will make payments to the creditor according to the timeline in the agreement.


Debt negotiation has several benefits. It reduces the amount the debtor owes, which can give them peace of mind and financially help them get back on track. It can also avoid collection actions and wage garnishment.

It also may prevent interest accruing on the debt, which can help the debtor pay it faster.