Debt settlement offers consumers the least expensive and fastest ways to get out of credit card debt. Often referred to as debt negotiation or debt arbitration, debt settlement is a proactive approach to debt relief. It is a debt relief strategy that is best suited for individuals that have income but have fallen short on credit card payments, or have considered filing for bankruptcy protection.
Debt Settlement is a proven and effective bankruptcy alternative. It is most effective for unsecured creditors, which include credit cards, medical bills, and collection accounts of all types.
The total savings under this hypothetical is some $15,000.00!
How your debt settlement program work?
A licensed attorney will negotiate to reduce your unsecured debts (credit cards, department store credit cards, medical bills, judgments, personal loans, accounts in collections etc.) on your behalf to settle for an amount less than the principal balance owed.
Debt Settlement is most effective with a lump sum payment to the creditors. The funds to make the lump sum payment may be raised in a number of ways, including, but not necessarily limited to the following:
Retirement Plan Loans: Many plans ( i.e 401k ) allow participants to withdraw a percentage of what is saved in a lump sum. After the debt settlement is completed you repay yourself over time without losing the benefits of tax deferred appreciation.
Home Equity Lines of Credit: This allows you to settle your unsecured debts, like credit cards, for only a percentage of what is owed and pay yourself back while your home continues to appreciate.
Self Save: This method allows for monthly savings to equal 50% of the outstanding account balance(s). the debtor will make a fixed monthly payment for which those funds can be distributed to the rightful owner of the debt.
Once the debt(s) has been paid in full on the settled amount, the creditor will issue a letter to the credit bureaus stating the debt has been "paid", "settled", and/or "settled for less than full amount."
Why would a creditor accept a settlement?
Most of the time a creditor is willing to settle a debt for less if the debtor is having a legitimate financial hardship. This makes debt settlement an excellent debt relief strategy because the creditor realizes that a settlement offer is better than receiving nothing. The debt settlement attorneys acting on your behalf can take advantage of this leverage and will use their best efforts to eliminate up to 50% or more of your unsecured debt. Essentially, it's a win-win situation for both parties because the creditor is able to get something for the balance owed, and the debtor eliminates their debt for a fraction of the cost.
Disclaimer Legal Information Is Not Legal Advice This site provides information about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
Consumer Credit Counseling Information, Debt Management Plan Information, Debt Settlement Plan information, Credit Counseling, Credit Score, Consumer Credit Counseling Service, CCCS, Bill Consolidation, Credit Repair, and Debt Consolidation is not advice, and we recommend you consult a licensed credit counseling agency, debt settlement attorney, and/or licensed debt management plan administrator in your state if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
