What is Debt Settlement? - Debt-Relief

What is Debt Settlement?

Debt settlement is the process of negotiating with your creditors so that
you are able to pay off a certain percentage of the debt amount that you
owe. A debt settlement company will use different types of strategies to
negotiate with your creditors so that you get the best outcome. You'll
want to hire a debt settlement company that has arbitrators who are
experienced and licensed so that they can negotiate a deal for you with
your creditors. You can expect to lower the balances on the debt that you
owe by anywhere from 40% to 60%.

But how does the debt settlement process work? And why are creditors
willing to negotiate with you so that your debt balance is reduced? The
answer is simple: creditors know that if you end up declaring bankruptcy
that they may not have any chance at all of seeing any of the debt that
you owe repaid to them. Studies show that approximately 25% to 30% of all
bankruptcies that are filed each year are "current debt". Many people
obtain more credit to pay off another creditor. After a period of time
these people run out of credit to pay off their existing debt. And this is
when many bankruptcies are filed.

When people file a bankruptcy claim creditors don't get back any of the
money that is owed to them. This means that a creditor is better off
negotiating with the person who owes them money so that they can regain
even a small portion of the total amount of the debt. Debt settlement
companies will work with you and your creditors so that you can pay the
minimum amount of money back to your creditor.

A debt settlement company will allow a certain amount of time for the debt
to be settled. A common time period is 36 months and during this time the
creditor needs to agree to on a total amount to negotiate on. Before you
can use debt settlement to settle up your debts, you'll need to qualify
for the program. In order to see if you qualify or not, many debt
settlement companies will require that you talk to a consultant about your
personal debt. Together you'll set up a financial program that will meet
your needs. You'll be able to determine just how much money you need to
put aside every month so that you can start to pay off your debt.

Many times a debt settlement company will contact your creditors to let
them know that they will now be your representative for the debt that you
owe. This way you avoid the hassle of having your creditors continue to
call you looking for payments. If you find yourself deep in debt you may
want to consider debt settlement as a solution.

http://www.debtsettlements.net

Jon Thomas has been involved in finance and insurance, specializing in
emerging growth markets since 1979. He continues to write articles
concerning the public and their pressing financial concerns.
http://www.debtsettlements.net

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