Debt settlement involves negotiating with a creditor or creditors to pay off a percentage of your total debts at an agreed upon settlement amount. Often, people choose to utilize the services of a debt settlement company rather than attempting to do it on their own. Debt settlement companies traditionally employs various negotiation strategies to help settle your debts and can eliminate between 40-60% of your original balances.
Being the president of a debt settlement company, I am often asked how debt settlement works. In order to fully understand and appreciate the process that takes place between debt settlement companies and credit collection agencies, consider the following: Creditors know that roughly 30% of the 1.5 million bankruptcies that occurred last year were on debt that was reasonably current. Traditionally, people survive by borrowing from one creditor to pay another. However, this process eventually fails when consumers run out of available credit lines and find themselves unable to make their minimum monthly payments.
If a consumer files for bankruptcy, it is very likely that the creditor will receive nothing of the balance that is owed to them. Therefore, a creditor is better off negotiating with a debt settlement company. Most debt settlement companies work with customers that have legitimate financial problems and honestly need assistance.
The debt settlement process usually takes between 12 to 36 months, so consumers can wait for creditors makes the sensible decision to agree and negotiate. Besides the obvious benefit of debt settlement, another benefit is the help with creditor harassment. Debt settlement companies normally contact all your creditors and inform them that you are working with a debt settlement company and that you are now being represented. This is very important in that it helps minimize or eliminate creditor calls. The standard practice is to direct all communication to the debt settlement company that you are working with. However, it is important to remain cognizant of the fact that original creditors can still contact you legally, but most will comply with such requests.
The most important part of debt settlement is to complete settlement process with your creditors and or collection agencies. In order to do this, it is necessary for a debt settlement company to have you sign a contract and a document that legally authorizes them to negotiate with your creditors on your behalf; this is known as a "Limited Power of Attorney." During the settlement process, you will make a monthly deposit into a "settlement account" that will eventually be used for your debt repayment. As funds begin to accumulate in the account, the debt settlement company will start to negotiate with your creditors. Once a debt settlement offer has been agreed upon, you will need to send that amount, directly from your account, to the creditor. Once the payment has been made, that debt is considered settled in full. You will no longer owe anything on that debt and the account will be closed.
Alan Barnes
IAPDA Certified Debt Arbitrator
President and CEO of Debt Regret
http://www.debtregret.com
A headline for a retirement annuities flyer declares "Future Secured!"... Read More
An IVA (individual voluntary arrangement) is an alternative to bankruptcy... Read More
Do you want to reduce your debt? Having trouble paying... Read More
Many people have been taught that you cannot get ahead... Read More
Bills, creditors, debt collectors. Are you yearning for the days... Read More
There is more than one kind of bankruptcy. You should... Read More
Bankruptcy and Credit - What Happens After Your Debts Are... Read More
Most American consumers are living too close to the edge.... Read More
Planning To Achieve Debt EliminationOnce you have started the process... Read More
If you have found yourself in a position where you... Read More
Do You Need to Join a CCCS - Consumer Credit... Read More
So you feel like a hamster spinning your wheel? The... Read More
There are some new bankruptcy laws going into effect before... Read More
We have all experienced getting so far in debt we... Read More
Of all the problems possible in a marriage, finances cause... Read More
If you have incurred substantial personal debt, consider these options:... Read More
Good credit is everyone's dream. A wise use of credit... Read More
What is a debt management system, and when do you... Read More
So you've screwed up. You're drowning in debt. Maybe the... Read More
Outlined below are some of the benefits and drawbacks of... Read More
As a single mother, lets admit it, times get tough.... Read More
There are many debt relief programs out there both off... Read More
A Debt Checklist allows you to look at items and... Read More
Recently passed by Congress with overwhelming support, the oddly-named Bankruptcy... Read More
Should you be unfortunate enough to face a CCJ ?... Read More
What is debt settlement?Debt Settlement is a process to settle... Read More
It's never pleasant to realize that you're in financial hot... Read More
It has been said that everyday more and more people... Read More
Is there a way to get out of debt without... Read More
In this era where we are bombarded daily with commercials... Read More
Debt Settlement companies work with your creditors to help you... Read More
Living with debt is not something someone hopes for, but... Read More
Your FICO score or credit score as it's commonly called... Read More
Debt is quickly becoming an epidemic in America. However, through... Read More
On April 20, 2005, President Bush signed into law the... Read More
Do you want to reduce your debt? Having trouble paying... Read More
Yes, debt collection tips can help. You may think you... Read More
In March 2005, the U.S. financial services industry succeeded in... Read More
Living with debt is not something someone hopes for, but... Read More
Bills, creditors, debt collectors. Are you yearning for the days... Read More
People over extend themselves financially as a result of a... Read More
The New Year often brings with it a desire to... Read More
I have faced this financial question 8 years ago and... Read More
Next to winning the lottery, a debt consolidation loan is... Read More
Credit card debt have you drowning financially? You're not alone.... Read More
If you are in debt, well over your head in... Read More
Still living from pay to pay? Or envying those great... Read More
In all the technical discussion you hear about credit... Read More
Filing bankruptcy is not only a last resort legal action;... Read More
Have you ever felt trapped in a Rat Race and... Read More
In this era where we are bombarded daily with commercials... Read More
These days, getting into debt is easy.Unfortunately, getting out of... Read More
Want to know if your attitude towards your finances is... Read More
Do you have stacks of unpaid bills?Are you in debt?Are... Read More
Bankruptcy still remains a mystery in the eyes of many... Read More
"Legally terminate credit card debt! You can be debt-free in... Read More
If you want financial freedom, the first thing that you... Read More
Bankruptcy is one of the tougher choices we as adults... Read More
Debt is not much fun and when faced with it,... Read More
Do You Need to Join a CCCS - Consumer Credit... Read More
Credit card debt elimination can be done with a good... Read More
Living with debt is never a good idea if you... Read More
Debt consolidation, equity loans, credit counseling, debt management plans, even... Read More
Bankruptcy is a legal way to offer folks with high... Read More
The idea of moving abroad to escape debt seems to... Read More
Leaving school, getting a new job, or even a raise... Read More
Debt Relief |