If you’re being crushed by the weight of too many debts and you’re desperate to get out from underneath, debt settlement may be the right option for you. A good debt settlement company can help you lower the overall balance on you debts, potentially even combining multiple debts into a single monthly payment that is lower than all you existing payments combined. Debt settlement is a legal process used by both people in debt and their creditors to negotiate a settlement of an existing legal debt. This proactive approach can be the most cost-effective option to pay off your current debt while avoiding the negative effects of bankruptcy. Any person owing credit card debt, or any other debt, has the legal right to contact and negotiate with the creditors. The role of the debt settlement company is simple. They enter in to negotiations with the lender on your behalf and they talk about different possibilities to give you a debt relief. Generally the company tries to get the outstanding amount waived of. You will only have to pay the monthly installments. When looking into getting a debt settlement, it’s important to understand how much money you may be able to negotiate off your debt. The standard percentage to settle a debt for is 40 percent to 60 percent of the original debt amount. The actual percentage that the company will be able to settle for depends on how long the debt has been in collections, how eager the creditor is willing to be paid, and how big of a risk the creditor feels you are for bankruptcy. The obvious advantage to a debt settlement is paying less money for a debt. It also opens up more monthly funds to put toward other bills on your way to being debt free. Debt settlement can be a very useful tool in avoiding bankruptcy, which does stay on your credit report for years.

Have you been thinking why would a creditor agree to settle my debt? Well, debt settlement is intended for consumers who are unable to pay their bills, and if a creditor does not agree to settle, then a debtor may be forced to file bankruptcy. When bankruptcy is filed, creditors often receive none of the money owed to them. Obviously, it would be better to receive partial payment than no payment. The greatest advantage is that debtors can negotiate with creditors without the help of a debt settlement company, and often find great success in doing so. However, debt settlement can be a long, confusing, and intimidating process. Debt settlement companies not only know the tactics that make success likely, but also help to alleviate creditors’ harassment by becoming their contact instead of you.

Debt relief settlement programs, offered by credit counselors, volunteer agencies and attorneys, can help you repay your debts at an affordable rate. Under these programs, typically you may seek help through a credit counseling agency or other debt assistance provider, and after establishing your income, expenses and how much you owe, the debt relief settlement counselor negotiates affordable repayment arrangements with each creditor. Once all of the negotiations are confirmed, you may sign a contract and agree to pay a specific amount to your debt relief assistance organization as scheduled. They will pay your creditors and handle any communications with them for the duration of your settlement plan.

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Category: Finances
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