Discover What Debt Settlement Is And Isn" t
There are a large number of misunderstandings about debt settlement, and people have numerous questions about it too, so I have attempted to answer the questions, and to clear up the misunderstandings below.
In general terms, debt settlement refers to a process by which you or a representative negotiates with a creditor to get any, or all of;
a) a reduced interest rate b) a lower balance or forgiveness of debt c) a reduced monthly payment
The above states what debt settlement sets out to achieve and the following describes the ins and outs of the process.
1) You will need cash to make debt settlement work, and if you don't have any then forget about debt settlement.
2) You won't be offered a payment plan, but will have to pay a lump sum to either the creditor or his representative.
3) Settlements of debts will most often range between 25% to 70% on the dollar depending on the creditor.
But some credit card companies may make you a take it or leave it offer of 10 percent, and some creditors may refuse to play ball at all.
5) The best time to start the debt negotiation process is when you are three to four months delinquent because many lenders won't even discuss the issue if you're current. You should therefore expect to receive at least two months of letter and phone harassment before you instigate the procedure.
6) Credit card companies and collection agencies make it difficult and frustrating to talk to somebody in authority, so expect to be kept on terminal hold for hours upon hours.
7) Creditors have little or no interest in how much you owe other lenders, and are only interested in getting the highest settlement amount that's possible. This makes the handling of multiple accounts, which you almost certainly have, very difficult and very frustrating since you'll more than likely have to go back to lenders several times in order to work out deals that will satisfy all of them.
8) You will be put under a lot of pressure to move quickly, and you will be asked time and time again to wire money within a few hours. The thinking behind this is that it will increase your stress and result in the recovery of money.
9) In spite of the pressure that you'll be put under, you will have to insist on getting any and every deal in writing before you make any payments because if you don't, you'll more than likely get demands for more money.
10) Your credit score will be very adversely affected.
Having read all of the above you're quite likely to ready to call a debt settlement company that will handle all the work, and soak up all the abuse for you, and although that are excellent agencies out there, you must be very careful.
The present economic crisis has spawned a whole host of new companies that often know less far less than is written here about debt settlement, and there are many others that are out and out rip-offs.
Never even consider paying a debt settlement company an upfront fee or any kind of deposit, and always be sure to check out a company with the Better Business Bureau before you sign anything at all.
Personal experience has led me to believe that most lenders have either little or no interest in debt settlement arrangements. They'd much rather extend a little more credit, so that the borrower will keep making everlasting minimum payments and continue making unending fees.
Scores of excellent credit counseling agencies exist however, and many of the best ones will even handle debt settlement. They're inexpensive, and if you have debt problems and haven't tried one, then please do so right away.
In general terms, debt settlement refers to a process by which you or a representative negotiates with a creditor to get any, or all of;
a) a reduced interest rate b) a lower balance or forgiveness of debt c) a reduced monthly payment
The above states what debt settlement sets out to achieve and the following describes the ins and outs of the process.
1) You will need cash to make debt settlement work, and if you don't have any then forget about debt settlement.
2) You won't be offered a payment plan, but will have to pay a lump sum to either the creditor or his representative.
3) Settlements of debts will most often range between 25% to 70% on the dollar depending on the creditor.
But some credit card companies may make you a take it or leave it offer of 10 percent, and some creditors may refuse to play ball at all.
5) The best time to start the debt negotiation process is when you are three to four months delinquent because many lenders won't even discuss the issue if you're current. You should therefore expect to receive at least two months of letter and phone harassment before you instigate the procedure.
6) Credit card companies and collection agencies make it difficult and frustrating to talk to somebody in authority, so expect to be kept on terminal hold for hours upon hours.
7) Creditors have little or no interest in how much you owe other lenders, and are only interested in getting the highest settlement amount that's possible. This makes the handling of multiple accounts, which you almost certainly have, very difficult and very frustrating since you'll more than likely have to go back to lenders several times in order to work out deals that will satisfy all of them.
8) You will be put under a lot of pressure to move quickly, and you will be asked time and time again to wire money within a few hours. The thinking behind this is that it will increase your stress and result in the recovery of money.
9) In spite of the pressure that you'll be put under, you will have to insist on getting any and every deal in writing before you make any payments because if you don't, you'll more than likely get demands for more money.
10) Your credit score will be very adversely affected.
Having read all of the above you're quite likely to ready to call a debt settlement company that will handle all the work, and soak up all the abuse for you, and although that are excellent agencies out there, you must be very careful.
The present economic crisis has spawned a whole host of new companies that often know less far less than is written here about debt settlement, and there are many others that are out and out rip-offs.
Never even consider paying a debt settlement company an upfront fee or any kind of deposit, and always be sure to check out a company with the Better Business Bureau before you sign anything at all.
Personal experience has led me to believe that most lenders have either little or no interest in debt settlement arrangements. They'd much rather extend a little more credit, so that the borrower will keep making everlasting minimum payments and continue making unending fees.
Scores of excellent credit counseling agencies exist however, and many of the best ones will even handle debt settlement. They're inexpensive, and if you have debt problems and haven't tried one, then please do so right away.
