Debt settlement is a process wherein you engage with your creditors to settle your debts to a figure that is more manageable. You may undertake the process of negotiation directly with your creditors; however it is usually more advantageous to engage a third party who is a professional. Using debt settlement firms, you can achieve anything between 30%-60% reduction in your total debt, as well as improvement in your credit profile.
Some Direct Benefits of Debt Settlement
When you run up debt that proves unmanageable for you to service with your current income, debt settlement gives you quite a few options to reduce your stress. Your appointed debt settlement agency can effectively negotiate with your creditors to reduce the amount of the principal debt. When creditors realize that it is not possible for you to repay the full amount, they are usually amenable to reducing your debt amount by even up to 60% of the original figure. In many cases where there is a huge accumulation of late fee charges; it is possible for you to get a waiver of the entire amount. Depending upon the skill of the debt settlement agency, you can achieve substantial reductions in the applicable APR. You can also negotiate the amount of monthly instalments that you need to pay and even the number of months over which you can settle your debts. These steps can make your monthly outgo more affordable.To know more about top debt settlement companies click here.
Consider Time as Your Friend
Do not expect debt settlement to be a fast process. Most creditors are initially unwilling to reduce even a single penny from their dues. It is only when that you have conclusively proved to them that is impossible for you to repay them as per the original schedule and that the creditors may appreciate your seriousness. The effectiveness of debt settlement can really be enhanced by your extending the time of the negotiation to create pressure on the creditors as they realize that their income has been turned off. Experienced debt settlement agencies are experts in creating the right pressure on creditors to encourage them to accept reductions in principal and interest. The usual process may take up to nine months before creditors signal their willingness to settle. With the help of a debt settlement agency it may be possible for you to have a debt-free profile in anywhere between 36-48 months.
Why Should You Settle Your Debt Instead Of Filing for Bankruptcy?
Debt settlement has multiple advantages. Firstly, you stop getting harassed by a number of creditors to whom you owe money. You can really save thousands of dollars by engaging an expert debt settlement agency that will cut down your existing debt by up to 60%. After the process, you will no longer have to remember to make a number of individual payments to creditors but just need to make a single payment to the debt settlement agency.You can decide on how much money you can devote every month as an instalment payment and in turn take as much time as necessary for you to wipe your slate clean. Undergoing this structured debt settlement process also makes it easier for your earlier defaults to be wiped clean from your credit report as creditors will be more willing to issue you a certificate that the dues have been settled in full. When you file for bankruptcy all your financial records become public knowledge and there is a fair amount of social stigma attached. Your reputation takes a beating and it may damage your professional and social relationships greatly. The process of debt settlement negotiation has you more in control of the situation and does not damage your self-esteem. The process of filing for bankruptcy is also quite cumbersome and bureaucratic taking quite a lot of time to achieve the desired outcome.