Debt Settlement What Exactly Is?

By: James1

Debt settlement is a process to eliminate your outstanding debts for less than the amount actually owed to the creditors. Debt settlement is a legitimate way of solving your problem without the need for bankruptcy. Debt Settlement is a positive approach for debtors experiencing the stress of too much debt. In this process, you stop paying monthly installments to your creditors and instead save the money. When you have saved at least 50% of the total amount, you start negotiating with your creditors for a settlement. This process is also known as Debt Arbitration or Debt Negotiation- most cost-effective option to pay off your debts and it can be a good alternative to bankruptcy.

Your incentive to settle is to avoid bankruptcy and to ethically discharge your debts. You would pay the account off in about 30 years having spent ten times or more what you initially borrowed. We understand your predicament and the credit card companies have been counting on and profiting from it for years. Debt settlement can end the 30 year cycle and cut it down to 3 years or less.

You can do it yourself by contacting your creditors directly. If you are not comfortable in dealing with them, contact a debt settlement company to represent you against your creditors. The settlement company will create a trust account for you. Every month you will save a certain amount of money in that trust account. The maximum amount that you can deposit in your trust account depends on your disposable income. The settlement company then negotiates with your creditors for a reduced and affordable amount. An efficient settlement company can reduce the payable amount to 40% - 60% of your original amount.

It is true that creditors and collection agencies often deny negotiating with consumers. They prefer to create pressure on the consumer to collect more money. Creditors always try to recover default or charged-off loans in some way or other. When you are offering a debt settlement plan, creditors need not spend money for collection. They also become assured that you are trying to pay them and thus they won't need to sell your account to collection agencies at a much lesser price. Thus a reduced payment amount is always more than what they would get from collection agencies.

Benefits of the Debt Settlement is that, you have to pay less when a debt becomes delinquent, late fees, over the limit charges are accumulated with the total debt amount. Majority of the debt settlement companies negotiate with your creditors and restructure the debts that you owe. A monthly installment for all your debts with lesser time you take to become debt free. Most debt negotiation plans are worked out for an extended time period. In such cases you have the provision to extend the time will helpful for people who cannot afford to pay the whole amount at one go. And one last but not least benefit is that you can stay away from dealing with abusive creditors and harassing debt collectors and debt buyers. Your debt settlement US Company will directly deal with them. They will also make sure that you do not get abusive and harassing calls anymore.

It is very important to take the right decision at the right time to get full benefit from a debt settlement program. When you are few months behind with your payment, your creditor might agree to reduce 40% - 60% of the original debt amount. If the account is charged-off, it is likely that your creditor would sell the account to a debt buyer. Dealing with these debt buyers is a nightmare. They often charges collection fees and deny accepting any repayment plan. Creditor can file lawsuit against consumer. Once a judgment enters your credit report, it stays there for 7 to 10 years. If you have received call already, settlement companies are unlikely to work with you.

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Author Talks about the Debt Settlement Process and give overview on Debt Settlement Program and its benefits and how to choose a debt settlement company.

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