Before getting down to the question, there's a saying in my neck of the woods. "If you're in trouble and you owe the lenders $25,000, you better worry... if you're in trouble and you owe the lenders $2 million, then the lenders better worry."
Okay, getting back to the question, it's one that people frequently ask themselves when they find themselves suffocating under their debt load.
As a banker and lender, I've been the person on the "other side" of the desk, (you know... the one you negotiate with) more often than I care to remember. This is a bit of a unique a perspective compares to most, that has given me great insight into the pros and cons of do-it-yourself debt negotiation.
Massachusetts Bankruptcy Lawyer, Bankruptcy Trustee, General Motors Bankruptcy,
Here's my take on this.
Before going further though, remember that no two cases are identical and so my comments, and any others that you read on the net for that matter, should only be relied upon for general information. Make sure that you consider all aspects of your situation and also investigate the legal framework in your area thoroughly before deciding to go it alone.
Technically and legally there's no reason why you can't do your own debt settlement negotiations. From a practical point of view though, is it desirable? It depends.
Are you good at negotiating? Do you have assets that aren't exempt under the laws where you're located (how much do you stand to lose?) How much do you owe in relation to your revenues? Are you aware of what settlements have been negotiated by others in similar situations in the past? This is particularly important because this gives you some sort of yardstick by which to measure any proposed settlement. Is it good? Are you leaving too much on the table? Can you approach the process in an unemotional and objective manner, or are you stressed out and emotional? Do you still have credibility with the lender, or have you not kept past promises? Have you considered the non-financial elements - reputation, length of the agreement, etc? Can you prepare a realistic financial assessment and budget?
My experience has been that most people are understandably too subjective, emotional and optimistic to do a good job of negotiating debt relief on their own behalf.
Looking back at the comment at the beginning of this piece, remember that unless you owe the lender a ton of money, the lender doesn't have anywhere near as much at stake as you do and thus negotiates in a more reasoned and impersonal fashion. He/she is also less likely to fold and more likely to call your bluff unless you're very good at negotiating.
Some will tell you that you can roll into the lender's office and threaten to declare bankruptcy if he/she doesn't agree to your proposal. It's totally irresponsible, and downright dangerous, for anyone to make such an offhand comment without knowing your specific circumstances.
Bankruptcy is a legal process that may or may not be appropriate in your situation. Unless you're 100% sure that you're on solid ground, and even then, unless you're positive that it's the best option, I don't suggest using that strategy.
The last thing you want to do is hit a lender who for one reason or another is in a "Go ahead, make my day!" mood, or put him/her in one because of a negotiating faux pas. You just might find yourself with no option but to carry out your threat and that may hurt more than you thought.
We're talking of one of the most important stages in life here, so don't go off half cocked based on comments from a relative or friend (unless he/she is a lawyer in this field), or even from me or others on the net.
Ask yourself - Why do lawyers hire other lawyers to represent them in lawsuits? Why do doctors go to other doctors for treatment? Simple... because when it comes to ourselves, we're usually not sufficiently objective to be effective and we're usually better off in the hands of a professional.
Before you act, make sure that you have all the facts and know all the options. You can do this by getting information from a specialist. Some companies that offer debt negotiation services offer free personalized initial consultations.
Why not use them? It costs you nothing and, if you don't like what you hear, there's no obligation to go further, but at least you'll come through the process with a better understanding of your position and options.
This, of course brings up another concern and that is..... How do I find a reputable company? I'll address that in my next piece.
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