In general, the best choices for debt negotiation and settlement are unsecured loans and credit cards. Since there is no collateral that can be attached to satisfy the debt, creditors are more likely to negotiate to avoid writing off the entire debt. The two most common approaches for debt negotiation are to pay a lump sum that is less than the total amount owed, or to restructure the payment schedule with lower monthly payments.
With the first option, you negotiate a reduced, upfront payment that permanently cancels the entire debt. Many creditors will only accept this approach because their goal is to erase the debt from their books without having to wait an extended period. If you are already struggling with your current debts, it may be difficult to raise the cash necessary to accomplish this. In which case, you might consider the second option to reduce the principal and possibly stretch out the payments.
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