Debt Settlement is the fastest and least expensive way to get out of debt. Often referred to as Debt Negotiation, Debt Settlement is a direct and ambitious approach to debt reduction and it is best suited for individuals that have considered filing for Bankruptcy protection.
How it works:
Settlement attorneys will negotiate with unsecured creditors (credit cards, retail store cards, medical bills, judgments, personal loans, etc.) on behalf of the client to settle for an amount much less than the balance owed. In return, the debtor will make a settlement payment for the balance owed. Once the debt 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?
Oftentimes creditors are willing to settle the balance of debt owed if the debtor is under financial hardship. Debt Settlement is an excellent alternative to Bankruptcy and in the creditor's eyes if the debtor is under financial hardship and chooses to file Bankruptcy the creditor would receive nothing. Debt Settlement professionals, working on your behalf, take advantage of the leverage they have in this situation and routinely eliminate 30-50% of the debtor's unsecured debt. It's a win-win situation for both sides in the sense that the creditor is able to get some payment towards the balance owed, and the debtor slashes his outstanding debt and avoids the long and drawn out process of filing Bankruptcy.
What are the benefits of debt settlement?
Debt settlement is the least expensive and fastest way to settle your unsecured debts. Through Debt Settlement you pay back your debts in a 24 to 36 month period . You typically only pay back 65% or less of your outstanding balances. Through Bankruptcy or Debt Consolidation you pay back 100% of your balances plus interest over a 5 year term. Derogatory accounts acquired on your credit report during debt settlement will fall off your credit in seven years or less, whereas a bankruptcy will remain on your credit for 10 years.
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