What does a Debt Negotiator do?

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  • Written By: U. Ahern
  • Edited By: W. Everett
  • Last Modified Date: 18 November 2019
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When someone finds himself in severe financial problems, but does not wish to declare bankruptcy, a debt negotiator may be the best answer. Just as it is unwise to act as one's own lawyer, it may unwise to attempt to negotiate a personal debt settlement. The debt negotiator deals with creditors for the debtor and negotiates a reasonable settlement. Contacting a debt negotiator is advisable if dealing with multiple creditors, dealing with an extreme debt load, or if there are any tax implications.

There are two types of debt. Unsecured debt includes medical bills, credit cards, personal loans, and student loans. Debt for tangible goods such as a house or a car is secured debt. Secured debts cannot be settled. If an individual defaults on a secured loan, the lender takes the item the loan is secured against. Unsecured debts are good candidates for debt negotiation.

A lawyer is the strongest debt negotiator. Using a lawyer as a debt negotiator is advantageous if complex legal and tax issues are involved. Credit counseling services can also provide debt negotiation assistance. It is crucial for the debtor to feel comfortable with the debt negotiator. Open communication between them is vital.


The debt negotiator will create a timeline for the negotiation. Not all debts will be negotiated at the same time. There is a benefit to addressing one debt at a time. Once the first debt is settled, it is entered on the credit report as satisfied in full. The satisfied-in-full statement increases the chances of obtaining a better settlement with the next creditor.

A debt negotiator is experienced and equipped to determine which debt to settle first. Additionally, because the debt negotiator is not personally involved, he can look at the big picture. He understands the goal and takes steps to achieve it without being emotionally involved. His guidance is invaluable to the debtor, who often feels overwhelmed by crushing debt and pressure from creditors.

Most debt negotiation should be done via correspondence, as opposed to live interaction. This provides a paper trail documenting every interaction between the debtor and creditor. Once a settlement is reached, this can also document the specific details of the agreement. All correspondence should be sent by traceable mail.

There are many reasons why good people find themselves in overwhelming debt. The services of a debt negotiator can help an individual move forward with a plan and a brighter outlook for the future. Credit records will show the good faith effort to repay debt, and creditors receive a portion of the original obligation.


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