Debt settlement is one of the fastest ways to get out of debt. Debt Settlement is a direct approach to debt reduction and it is best suited for individuals that have considered filing for bankruptcy but don’t qualify.
Many people take advantage of debt settlement programs to reduce debt. Those who have incomes too high to qualify for Chapter 7 but have trouble making their monthly payments on their credit cards, personal loans, medical bills and other types of unsecured debt become good candidates for debt settlement.
Debt settlement companies 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.”
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 management professionals, working on your behalf, take advantage of the leverage they have in this situation and routinely reduce the debtor’s unsecured debt.
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