Debt Settlement
Let's Settle This, Fair and Square!
Your debt, that is. And that's what debt settlement does for you. The agreement is that your creditors will write off a huge portion of what you owe them (60-80%, in fact) in exchange for immediate payment of the remaining balance. It doesn't sound real, does it? But the reality is that debt settlement is a very real way to get debt relief that people use every day.
The reason creditors will agree to debt settlement is because they think you're near your lowest point. They figure that getting some of what you owe them is better than getting nothing, which is the next step. They think you'll either stop paying or file for bankruptcy, and both of those things put them on the losing end of the deal. At least this way they get something. But it's not without obligation and sacrifice on your part. They sort of punish you in two different ways.
First, they want their money immediately. That's why most debt settlement companies try to get them to agree to an amount that you actually have. If your creditors won't agree to go that low, your debt settlement company can sometimes get them to give you 1-3 years to pay the difference between what you can pay now and the amount they agree to. If you don't have a lot of cash on hand, you might want to look into a different debt management program like debt consolidation, a debt consolidation loan or a debt consolidation mortgage.
The second way your creditors will "punish" you for participating in a debt settlement program is to report it to the three major credit reporting agencies. Each of your creditors you settle with will report it too, so it will be like each of them reporting a late payment - a high price to pay for debt reduction.
Weigh your options and explore all debt management programs before you decide if a debt settlement company has what it takes to help you recover.
All material copyright © 2008 Debt Doldrums. All rights reserved.
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