When Kentucky residents find themselves mired in debt, they often look for outside assistance. In some cases, they may be unsure about bankruptcy, so they consider working with a debt negotiation firm. As with many solutions to debt problems, debt negotiation carries its own set of advantages, disadvantages and risks.

Debt negotiation is a process by which a professional negotiator works with creditors on behalf of its client. The negotiator attempts to persuade the lender to either reduce interest rates, cut the amount of debt owed or a combination of the two. During the time of the negotiation, the client is likely not making payments, an action that can result in fees, creditor harassment and credit score damage.

Once a successful negotiation is completed, it is then up to the client to make agreed-upon payments based on the new terms. Because of the nature of debt negotiation, it is extremely important that consumers find a firm that is competent and will act in the client's best interest. It is against the law for debt negotiation company to charge any upfront fees. The firm must first negotiate with the creditors and the client must agree to the plan before fees can actually be charged. Upfront fees are a definite red flag.

If negotiations prove to be unfruitful, another possible alternative could be filing for bankruptcy. The two principal forms of bankruptcy that are available to consumers are Chapter 7 and Chapter 13. Each has its own set of eligibility requirements, and the process differs greatly between the two. An attorney who has experience with these matters can provide information to people who are interested in learning more about the topic.