Compare Debt Settlement to other debt relief options

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Solutions4Debt.com is an internet information portal that provides consumers with timely articles and current news stories specifically targeting the debt relief option of Debt Settlement.

The Solutions4Debt.com consumer portal is an iniative of IAPDA, International Association of Professional Debt Arbitrators.

Solutions4Debt.com is dedicated to the elimination of personal debt through a structured Debt Settlement program.

This website is provided to help educate consumers on the Debt Settlement debt relief option. Depending on a consumers situation, debt settlement may be the best decision they can make. As a debt relief option it will have less impact on their credit rating and their future than a bankruptcy.

Professional Debt Settlement Companies will set up payment plans and work with the consumer's creditors to settle unsecured debt. They have the experience and resources to help the consumer receive the best settlement possible. And since they work with creditors all the time, they often know how much of a reduction each will accept, therefore getting consumers the maximum benefit.

What is Debt Settlement?

Debt settlement is also known as debt negotiation. This type of service can be used to help get relief from credit card debt or other unsecured loans.

When a person is unable to meet financial obligations and is continually falling farther behind on payments, creditors would rather agree to a settlement of a bill owed than have the debtor file bankruptcy, and receive no money at all.

In a negotiated agreement, creditors agree to accept a payment that is less than the full balance but consider the account paid in full. In many cases, outstanding debt can be reduced by 40-60%.

If a person is behind in paying their debts, they may even receive unsolicited mail or phone calls from creditors offering a settlement amount considerably lower than the balance owing if they pay the offered amount in full according to their terms (usually a specified period of time, anywhere from a few days to a few weeks. Some creditors may even offer payments over a 2, 3 or 4 month period).

Negotiating a Debt Settlement

Consumers can contact creditors themselves and discuss a settlement agreement, or hire professionals to help them. If a consumer can get money that can be used to make the debt settlement, they can save a lot over paying the full amount. A consumer will save not only the interest portion of the debt but also on the principal owed.

Creditors will often agree to a larger reduction on the outstanding balance in exchange for an immediate payment. Consumers may also be able to arrange to pay a decreased principal over a slightly extended period of time, and negotiate for such things as lower interest rates or the elimination of late fees.

Even though a consumer has reached an agreement, there are a few creditors who will still report the negotiated settlement to credit bureaus. Even with that to consider, depending on the situation, debt settlement may be the best decision the consumer can make. As a debt relief option it will have less impact on their credit rating than a bankruptcy.

Before deciding if settlement is the right choice, consumers should review their financial situation and determine if they are in a position to negotiate an agreement. Do they have access to money or the ability to borrow? Consider tax refunds, borrowing from family, taking a mortgage (refinancing, 2nd mortgage, or home equity may work), etc.. If they choose to make monthly payments, what can they afford to pay each month?

Monthly Payments

Professional Debt Settlement Companies also offer escrow services. The consumer would make regular negotiated deposits to a third party savings account, and once they reach the minimum balance needed to settle one debt, the debt settlement consultant would deal with the creditor to arrange a settlement amount and any payment options.

A note on Professional Services

Professional Debt Settlement Companies will set up the structured payment plans and work with the consumer's creditors to settle unsecured debts. They have the experience and resources to help the consumer receive the best settlement possible. And since they work with creditors all the time, they often know how much of a reduction each will accept, therefore getting consumers the maximum benefit.

Debt Consolidation Companies or Credit Counseling Debt Relief Services generally propose a five year repayment plan. Professional debt settlement can reduce this time to almost half (depending on the total amount a consumer owes and what they have available for repayments), so the consumer in a Debt Settlement Program will be debt free much sooner.

     
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