Debt Negotiation Settlement - Understanding the Steps of Debt Settlement
Debt settlement is the process of negotiating with creditors to pay off a portion of the total debts at an agreed upon settlement amount.
The entire process generally takes between 12 to 36 months and the debtor can eliminate 40-60% of his/her original balances through this method.
Unless you are confident of success at negotiation, it is best to hire a settlement company to negotiate on your behalf.
You should choose the most genuine and professional settlement company who will be able to best negotiate with the creditors.
Debt settlement companies normally seek out and inform all your creditors that you are being represented by their company.
Generally, this helps to minimize or eliminate direct creditor calls, though the creditors are still free to contact you legally if they wish.
For the settlement company to represent you, it is necessary that you sign the power of attorney authorizing them to represent you.
A settlement account needs to be opened and you need to make monthly payments into the account which the company will use to repay your debts.
Once the entire debt balances are over, the account will be closed.
The debt settlement option is a successful model of debt elimination because creditors are also aware that they have more of a chance at recovering at least a part of their debts through settlement.
Even if the creditor has to forgo a portion of the interest, they would still be happy to recover a lump sum on the principal.
If settlement does not, the next best option that the debtor would consider would be to file for bankruptcy, in which case they are not obligated to pay any amount to the creditors.
The drawback of the settlement process is that a settlement could adversely affect your credit score.
However, if you are already missing payments, your credit rating would already be affected and you are unlikely to find people who will be willing to loan you money with past due accounts at a reasonable interest rate.
In such cases, settlement is often the best solution to eliminate debt from your life.
The entire process generally takes between 12 to 36 months and the debtor can eliminate 40-60% of his/her original balances through this method.
Unless you are confident of success at negotiation, it is best to hire a settlement company to negotiate on your behalf.
You should choose the most genuine and professional settlement company who will be able to best negotiate with the creditors.
Debt settlement companies normally seek out and inform all your creditors that you are being represented by their company.
Generally, this helps to minimize or eliminate direct creditor calls, though the creditors are still free to contact you legally if they wish.
For the settlement company to represent you, it is necessary that you sign the power of attorney authorizing them to represent you.
A settlement account needs to be opened and you need to make monthly payments into the account which the company will use to repay your debts.
Once the entire debt balances are over, the account will be closed.
The debt settlement option is a successful model of debt elimination because creditors are also aware that they have more of a chance at recovering at least a part of their debts through settlement.
Even if the creditor has to forgo a portion of the interest, they would still be happy to recover a lump sum on the principal.
If settlement does not, the next best option that the debtor would consider would be to file for bankruptcy, in which case they are not obligated to pay any amount to the creditors.
The drawback of the settlement process is that a settlement could adversely affect your credit score.
However, if you are already missing payments, your credit rating would already be affected and you are unlikely to find people who will be willing to loan you money with past due accounts at a reasonable interest rate.
In such cases, settlement is often the best solution to eliminate debt from your life.
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