Contrary to what people may believe, settlements are not for the debtor to avoid paying back their loans, but to make the burden lighter.
Debt companies negotiate with the creditors on behalf of the debtors and reach a settlement amount which is approximately 50% less than the original amount payable.
Moreover, the debtor can pay this amount in instalments.
At the same time, the loan accounts are re-aged to prevent them from showing as delinquent.
The interest on the payable amounts is waived off.
There are some companies which specialise in the settling of credit card loans.
Credit card loans are unsecured loans; hence the interest rate on them is very high.
The companies negotiate with the credit card companies and reduce the total amount payable.
They then pay off the various debts with a consolidated loan which is at a much lower rate of interest.
Settlement companies convert unsecured loans secured loans which have a lower rate of interest.
Usually only debtors who have debt of a minimum of $10,000 are eligible for settlement.
Debt settlement companies arrange for other benefits like moratorium, moratorium, and conversion of unsecured loans to secure loans etc.
for the others.
Information about debt companies is easily available on the internet.
Moreover, there are also non profit debt relief networks which have several settlement companies affiliated with them.
Some of these debt relief networks also provide free debt settlement guidance to debtors.
But in this case the debtors have to negotiate with the different creditors on their own.
The debt settlement companies associated with such networks have to show a proven track record of settlements before becoming members.
Moreover, they also have to pass a stringent ethical standards test.
It is therefore better to hire a company affiliated with such a network.