Is Debt Settlement A Solution for You?
May 12, 2008 · Print This Article
If you were to take a survey of the American public, you would find that the majority of people in America have debt. The amounts they owe can range from a few hundred to a few hundred thousand. Many of these people are anxious to do something about their excessive debt, yet they aren’t interested in filing for bankruptcy, nor are they interested in putting their home up for collateral so that they can take out a debt consolidation loan.
While bankruptcy and debt consolidation are popular options with quite a few people, others opt for debt settlement to make their bills more manageable.
What is debt settlement?
Debt settlement is a course of action where a debt company that you contact to help you steps in and negotiates your debt with your creditors. These companies exist to help consumers reduce their debt and make it easier for them to pay each month. Financial professionals call each of your creditors in turn and ask them if they would reduce the amount of your payments, the amount of interest you are paying, or the total amount that you owe.
If the company is a good one and knows what to say and how to say it, they will be able to get the amount that you owe reduced to a more manageable amount, or at the very least, have each of your credit card accounts set up with a payment arrangement so that you are paying a lesser amount each month that you can better afford.
You may wonder if your creditors would agree to any of this, for they have seemed pretty unyielding the times you have spoken to them on the phone. The financial professionals are used to speaking with the customer service representatives at the credit card companies, and can usually get the job done. The credit card companies usually agree to the reduced payment and even a reduced total debt amount, because they know it is in their best interest. After all, they do want to be paid some amount!
There are a couple of drawbacks to using debt settlement. Some of these companies charge a pretty hefty fee, as much as fifteen percent of your total debt. Often, they want this money up front, but will offer you a free consultation. Also, debt settlement shows up as a negative on your credit report. You will need to take a long, hard look at your situation in order to decide if this option is right for your circumstances.
Recent additions:
Comments
Got something to say?
You must be logged in to post a comment.