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Multiple Debt Settlement Plans
If you are considering methods and strategies to get rid of
excessive debt, there are multiple debt settlement plans available from which to
What is Debt Settlement?
Debt settlement, in its basic form, is a process of
securing a reduced total debt amount from creditors, in the event that the
monthly payments on such debt cannot reasonably be made. The situation usually
occurs when a consumer has engaged in irresponsible or impulsive spending for a
lengthy period of time or when financial circumstances change negatively, due to
job loss, demotion, or medical issues.
When an individual determines that debt settlement is the
best solution to credit problems, he needs to select from procedural and payment
options, dependent upon his financial circumstances and the requirements of the
creditors, as follows:
- He can attempt the debt settlement himself,
debt negotiating with each creditor for a lower total amount of debt and a
payment plan that his budget will allow. This requires great skill and
commitment, and individuals sometimes obtain as much as 50% reduction in
total amount owed. Unless the debtor is 60-90 days late in payments,
however, no creditor will consider such negotiation.
- He can employ the services of an attorney or a debt
settlement firm, for a fee. The negotiations are all conducted between the
employed settlement agent and the creditor, relieving the timid and the
non-committed of an often arduous and complex process.
- If debts have been turned over to collection agencies
or companies, the process can become more time-consuming, and the
negotiations more complex. It will be important to know whether the
original creditor has simply contracted with the collection service or has
actually sold the debt to a collection company. This important fact will
determine how much the debt can actually be reduced.
- If the debtor is not able to pay the reduced
settlement amount in full at the time of settlement, arrangements will then
have to be made for payment plans. These are often secured with individual
creditors or by securing some type of debt consolidation loan to pay off the
settled debt. Homeowners can often access some of the equity in their homes
for this purpose, and the interest rates on these loans will typically be
far less than conventional consolidation loans.
settlement plans include combinations of the above. An individual may be able
to negotiate with some creditors but not with others, and will thus need
settlement services of a professional. Some creditors will only take full
payment once the settlement is reaches, while others will be willing to set up
payment plans. Each creditor must be approached individually in the settlement
process, because the “rules” will be different.