gold dollarDebt Settlement - Another Debt Relief Option

Debt settlement, also known as debt arbitration, is another type of debt relief program.

The business of settling debt became prominent with the deregulation of banks and the loosening of consumer lending practices during the mid 1980's and early 1990's.

With bank deregulation and looser lending practices, an economic recession followed causing much financial hardship for consumers. Does this sound like history repeating itself in today's economic climate?

How Does Debt Settlement Work?

Your creditors need to agree to reduce your debt in exchange for one settlement payment or a series of fixed payments. Reputable debt settlement companies can negotiate with creditors on the borrowers' behalf to reduce the overall debts in exchange for an agreement for regular payments to be made. Student loans, auto financing or mortgages cannot be included.

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Once you negotiate your settlement in writing and the agreed upon settlement amount is paid, your debt is gone forever. That final settlement payment is regarded as payment in full of the original debt. A good settlement program can reduce your total unsecured debt by 40% - 70%.

Win - Win

Settling debt is a good alternative to bankruptcy as it avoids the stigma and the court mandated controls of bankruptcy. The creditor regains some trust that the borrower has the intention of paying back what he can of the debts and will not be filing bankruptcy. The creditor avoids the risk of losing all the money owed if bankruptcy is pursued.

What Happens ...

  Your credit reports will show evidence of settlements. (All debt reduction programs have a negative impact on credit scores.)

  Your FICO score will be lowered.

  Tax liens or domestic judgments are unaffected by settlements.

  All Student loans are unaffected by settlements and are also excluded from Chapter 7 bankruptcy.

Do-It-Yourself Debt Settlement

For people not easily intimidated, the do-it-yourself approach is the way to go. Do-It-Yourself settlements can be a much cheaper option than hiring the professionals and in many cases can be more effective because the consumer is much more vested in the process than an impartial third party.

It's possible for a consumer to use the methods of professional debt settlement companies or debt negotiation companies successfully. Charles Phelan's Settlement Success Seminar has been helping people become debt-free without bankruptcy since 1997. A former executive in the settlement industry, he teaches the do-it-yourself method of debt negotiation and the cost is substantially less than the fees you would be charged if you were to retain a debt settlement company to handle it for you.

Note: Do NOT send settlement payments until you have the deal in writing. No exceptions!

If you're struggling with credit card debt, CuraDebt are settlement specialists. Call for a consultation with a reliable debt specialist in your area.

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