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Proceed carefully when using debt negotiation programs

People who are in debt and seeking a fresh start often decide to negotiate a settlement with their creditors. There are many organizations that say they can help Wayne County consumers with the debt negotiation process. In this blog post, we will take a closer look at one kind of organization in this business.

Debt negotiation programs are also known as DNPs or debt settlement companies. Sometimes they are organized as a for-profit business, other times they are organized as not-for-profit organizations. They usually claim that they can negotiate steep reductions in balances owed to creditors. Many DNPs are legitimate; however, some are a bit sketchy.

DNPs often claim that they can negotiate a consumer's total balance owed to about half of what it was before the debt negotiation process. But many DNPs charge high fees, often linked to the amount of debt that the DNP said it eliminated. This means that some consumers may actually find themselves with more debt when the DNP's fees are added.

Many DNPs also claim that there will be no negative credit implications from the debt negotiation process. But many creditors will not negotiate until a debt is several months past due, which usually means several months of negative reporting to credit bureaus.

It might not be a bad idea to get the opinion of a third party before proceeding with a debt negotiation. Many bankruptcy attorneys can provide their opinion of various DNPs. These attorneys may also be able to provide debt negotiation services themselves, as well as educating consumers about their options with bankruptcy. Those dealing with financial problems should take the time to become fully aware of the options available to them.

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