The definition of debt settlement is a third party who negotiates with lenders on behalf of the consumer. Debt settlement is a method of getting out of debt for the consumer’s who have fallen on hard times.
Debt settlement is one of the methods used by consumers when they fall behind on their unsecured debt obligations. A debt settlement company may be able to reduce the consumer’s outstanding balances. The consumer may be asking why use a debt settlement company instead of trying to negotiate with the lenders themselves. As a consumer you can take this approach, however one of the drawbacks is you will be working with multiple lenders. These lenders would want the agreed amount money upfront in order to settle your account.
By using a debt settlement program, they will negotiate on your behalf and notice the lenders of your indications of using a settlement program. The debt settlement program will set up a “trust/escrow account” for the consumer. Each month the consumer is deposit an agreed to amount in order to start saving. Once the account has reach at least half of the lowest outstanding balance of one your credit cards, the company will begin negotiations with the lender.
The consumer will now be making only one monthly payment instead of multiple payments over a set period of time. It may take between 12 to 48 months to complete the cycle of reducing the consumer’s unsecured debt.
So start today and contact a representative so they can answer all your questions so you can start living debt free!!
One of the ways to get relief is to use a debt settlement program. This program is not an easy fix or an overnight miracle for the consumer, this program can take between 12 to 48 months depending on the size of your debt. Basically the debt settlement program works with the consumer to establish a payment plan by which monies are placed monthly into a “trust/escrow account.” When a less half of the monies owed to a lender on your lowest balance credit card, then the debt settlement expert will begin to negotiate on the consumer’s behalf. The monthly payments into the account are normally much less than the current minimum monthly credit card payments. The debt settlement company is usually able to negotiate a 40 to 50 percent reduction of the consumer’s debt.
As a consumer you are asking why, would a lender expect this type of negotiation? The underlying answer is the lenders are more willing to take something against the outstanding debt than to have the consumer file bankruptcy. Normally, when a consumer files bankruptcy, the secured creditors are pay first from the consumer’s assets and the unsecured creditors receive little to nothing from the consumer. It is a win-win for everyone, the consumer and the lender.
That is a question that people are asking themselves every day. Our backgrounds are different but the circumstances are very similar in our behavior. A spouse’s lack of financial maturity and cooperation left one family falling further and further behind. A young couple trying to fix their financial failures and live well beyond their means suddenly are meant with the unexpected. And finally a single parent taking out thousands of dollars in credit card advances to pay for medical bills. Thus developing symptoms that become common in all of us – procrastination, inertia, helplessness and cluelessness in all things being financial.
We then try to place blame for our financial picture however the following is of our misgivings:
- Most people lie about the severity of their debt while others live in denial
- Anxiety or fear
- Not having enough money
- Lacking sufficient time to pay off our credit cards
- Uncooperative spouse
So, with that being said – there are options to these financial circumstances. In order to work with a debt settlement company, a consumer needs a lump sum or build up enough funds over a pre-determined time. Once enough funds are built up the negotiation process can begin. The debt settlement company negotiates on the borrows behalf with creditors to reduce the overall debts in exchanged for an agreement upon regular payments to be made. Only credit cards debts can be handled, not student loans, auto financing or mortgages.
Researching and comparing debt settlement companies will allow you to determine the company that meets your specific situation.
In today’s economical climate, there are a lot of people who are looking for debt relief on their credit card debt. In order to successfully tackle your financial situation you need to get organized and understand your situation. So, understanding the type of debt you have is a good place to start.
There are two types of debt secured and unsecured. In a secured loan, the debtors personal assets are guaranteed as collateral for the loan. In some cases, if the debtor is unable to repay the loan on time, then the lending agency can assume the assets as collateral.
Credit card debt is considered “unsecured ” debt and the most common of the two. In unsecured debt there is no collateral to collect if you default therefore the credit card company has the right to sharply increase your interest rate which can make it nearly impossible to payoff particularly if you are making the monthly minimum payments. Needless to say, you can start sinking further into debt.
Debt settlement is a process which debtors can turn to. The debt settlement company negotiates on your behalf with creditors to reduce the overall debts in exchange for an agreement upon settlement. The consumer makes payments on a monthly basis and over a period of time enough funds are built up allowing the settlement negotiations to begin. The debt settlement companies typically have built up relationships with the credit card companies and can reach an agreement rather quickly.
Living in debt can be very scary and sometimes it just takes patience and doing your homework and understanding your own financial situation. Once you make the decision – debt settlement can put you on the path of living debt free.
Start today by calling 1.866.963.9988
“Never let life’s hardships disturb you..no one can avoid problems, not even saints or sages” Nichiren Dasihonen
The above quote rings true for the consumer who is struggling with their unsecured credit card debt. The consumer not longer can avoid the problem, the unwanted telephone collection calls and letters from the credit card companies or collection companies. The time is now for the consumer to take action.
The consumer needs to know that they are not alone when facing issues in regard to mounting unsecured credit card debt. Once the consumer decides to take that first step they will start to feel better about their situation.
One of the fastest ways to find debt relief is using the debt settlement option program. When compared against other options, bankruptcy, debt counseling or do nothing approach.
As with any debt settlement program there are drawbacks. These negative issues might include, the forgiven balance is considered taxable income by the IRS and the settlement will be noted on your credit report.
A good debt settlement plan combines all the outstanding unsecured credit card debt and establishes a budget for monthly savings which is in the best interest of the consumer. This plan establishes the timeline for the exact amount of the monthly savings which might be less than the combined monthly minimum payments on all debt. Then estimates how long it will take before negotiations begin with the credit card companies. The key to how long is based upon monthly savings and outstanding balances. This process can take been 12 to 48 months. The consumer needs to remember that if their financial situation changes, they can opted out early and payoff their debt themselves.
So, take that first step today and call 866.963.9988
When is the best time to try to negotiate your debts? In life timing is everything. The same can be said for debt settlement and debt negotiation programs. If you try to negotiate to soon and you wont get anywhere and if you negotiate to late, you may end up in court or needing the services of a bankruptcy attorney.
How do I know when it is the right time to settle my debts? Continue Reading »
Will a credit card company really negotiate with me? If you are current on your credit card bills and have a good payment history it is unlikely that a credit card company will negotiate the amount of principal that you will have to pay back. Think about it, if you are current and have been paying on time, why would they want to take less from you. The credit card business is a cash flow business anyway. They will only start to care about their repayment if you stop paying on your balances.
You can only negotiate with a creditor once your are behind or are in collections
A creditor will be more interested in settling with you once your are behind or are in collections. Keep in mind that if you file bankruptcy the creditor will not get any more money out of you. It would be in their best interest to take something rather than them get nothing.
If you do not get anywhere with your debt negotiations you may actually want to consider bankruptcy. If the creditor knows that you are serious they may just take your offer. I would start out low and see what you can get. If you do not like dealing with creditors and collection agencies you could always hire and attorney or debt settlement firm.
This information is of general interest and is not legal advice. If you need legal advice seek the services or a professional or attorney
What is Debt Negotiation? Debt Settlement is a process where a debtor negotiates with a creditor and the creditor agrees to a reduced principal amount of payback. Debt Settlement is also know as debt arbitration and debt negotiation. Debt Arbitration is considered to be an honorable way to settle your debts.
Will a creditor really settle debt with a debt negotiation program? Continue Reading »
How do you settle collections and old debt? If you have old bills and collections that need to be paid, you may want to think twice about just handing over the money. Just handing over money to a collection agency may not help your credit score. The credit must be willing to report the collection account as a paid collection rather than an unpaid collection account on your credit report. Most creditors will be happy to take your money, they just wont bother to change your credit. Make sure to get it in writing that you are going to pay them only if they agree in writing to change your credit report. Continue Reading »
TASC stands for The Association of Debt Settlement Companies. The goal of TASC is to promote solid practices in the debt settlement industry and protect the interest of consumers and debtors. TASC also lobbies at the federal level on behalf of debt settlement companies. Continue Reading »
With the onset of the credit crunch, millions of people saw their mortgage rates adjust and their mortgage payments go through the roof. Property foreclosures have hit new highs across the country. The credit crisis caused other impacts in the financial markets. As the economy began to slow down, many consumers began to run into problems paying their credit card debt Obligations. Defaults on credit card payments have reached record highs according to mbna. Unfortunately once you are in a financial crisis there are not too many great options in terms of getting out of debt. One option is consumer credit counseling which will lump all of your bills into a single payment and get your interest rates and payments down. Many people would like to go this route but they just aren’t able to make the new payments. The only other option would be to file for a Bankruptcy. Continue Reading »
How Does Debt Consolidation Work?
This article is about the advantages of doing a debt consolidation program. You may not be aware of this but debt consolidation, CCCS, credit counseling and consumer credit counseling are basically the same thing. Doing a debt consolidation plan is different than doing a debt settlement program. In debt settlement you are reducing the amount of principal that you will pay back and in credit counseling you are negotiating the amount of interest you will pay back. In consumer credit counseling you will pay all of the principal back plus some interest. Continue Reading »
10 Tips on how to do your own Debt Negotiation and work with collection agencies, bill collectors and creditors
If you are going to do your own debt negotiation you are probably going to go up against a tough and aggressive pro. By following these steps you can take the upper hand and save yourself thousands by doing a debt settlement.
I think the first step in the game is to know what the rules of debt collection are. The more information you know about debt collection practices, the less harassment you will get. If a debt collector knows that you know the game, they probably wont mess with you as much. You need to become very familiar with the Fair Debt Collection Practices Act of 1977. You can also get a free booklet for the rules of debt collecting form the National Consumer Law Center. Continue Reading »