Goal Of A Debt Settlement Programme

The goal with debt settlement is always to significantly reduce the amount that must be paid back. Negotiation experience helps, and so does having enough capital to make a lump-sum offer. The first thing a debt settlement company will do is consult with the lender who initially provided the loan.

Negotiating With Creditors Reduces Your Balance – Not Just Your Interest Rate

Debt settlement is a form of negotiation that can lower interest rates and principal debt balance. Through this process of negotiating with creditors, debtors or their debt settlement company arrange to pay back a percentage of the debt. The creditor forgives the debt balance in a transaction called a “settlement,” where an amount agreed upon by both parties is paid by the debtor to fully satisfy the debt.

Unlike debt consolidation or credit counseling where the full debt balance is still repaid, debt negotiation only requires that a portion of the balance is repaid. This can make a huge difference in how much time it takes to relieve a debt.

Instead of being stuck with a credit counseling or debt management plan for 5 years, a good Debt Settlement Program can settle your debt in 3 years or less depending on the pace at which you fund the program. Also, you can save thousands of dollars in principal and interest payments through Debt Settlement when compared to other debt reduction options.

The Advantages of Debt Settlement

• BETTER THAN BANKRUPTCY. Provides an ethical and honorable alternative for those who face bankruptcy.
• PRIVACY. Debt settlement allows you to maintain privacy over your financial affairs (unlike bankruptcy, where everything becomes a matter of public record).
• CONTROL. Lets you take charge of the program and control your own destiny (unlike bankruptcy, where the courts decide everything).
• SPEED. Gets you debt free faster. Typical debt settlement programs have a duration of only 2-3 years versus 5-9 years or more for Debt Consolidation or Credit Counseling.
• LOWER OVERALL COST. Debt settlement ultimately requires the lowest total payout versus debt consolidation or credit counseling.
• FLEXIBILITY. Provides the most flexibility of any program in terms of monthly budgeting. If you have to miss a month your only penalty is that the program may take longer to complete. You can also “make it up” down the road by funding over and above your basic level.

What happens if lenders will not settle?

Creditors have no legal responsibility to work out a settlement on a credit card debt or other unsecured loan, but they are often able to recover more funds through debt negotiations than the alternatives such as a lawsuit or working with a collections agency.