Without a fundamental understanding of the way debt works, it’s impossible to understand the Debt Negotiation process and how it functions. Most people have too archaic a view on the debtor-creditor relationship and the way that money functions as it passes through both entities. We’ll do our best to give you a better vantage point on exactly where your money is going and whom it’s working for. Once you can understand the way the debt system works, you’ll be ready to learn about why Debt Negotiation is such an effective tool.
Money never sleeps
You might have heard the expression, “New York neversleeps.” To put it frankly, New York has nothing on money when it comes to a lack of shuteye. There is a huge discrepancy between the way money functions in your pocket and the way it functions within banks and creditors’ accounts. Unfortunately, many people view their debt in the same way they would view owing a friend $20 for a dinner he or she picked up the tab for. Money in the free market doesn’t work that way. Rather than storing it in the back of the mind and waiting for a payment at some point in the future, creditors waste no time in profiting from the fact that you owe them capital. The way many of them take advantage, especially in the case of mortgages and other large loans, is to sell the debts off. The debt buyer takes on the risk of non-payment by the debtor, but is usually entitled to the sum of the repayment.
It’s clear to see that the banks have been much more busy handing your real and prospective cash while you were slaving away trying to give them more to get them off of your back. However, at the end of the day, banks do share one striking similarity to your friend whom you owe money to. Both are interested above all in collecting on some return on their investment. Before the recession, banks had the luxury of being able to hardball debtors for 100% of their original principal and interest. After they took a hit at the hands of the recession, banks have shifted gears slightly. Households bringing in less money than when they originally took out the loan means that banks can’t completely rely on collecting on the full amount as frequently.
What does this have to do with Debt Negotiation
This has everything to do with Debt Negotiation. When you approach any bargaining table, bargaining power is the name of the game and the person with more wins. When it comes to your debt, your bargaining power comes from being able to repay some fraction of your debt rather than defaulting on it like so many have recently. However, you shouldn’t approach this table alone.