Debt settlement is an approach to reduce your dues by negotiating with your creditors. In this process the debtor and the creditor both agree on a reduced balance that will be regarded as payment in full. As long as the debtor continues to pay minimum monthly payments, creditors will not consider a reduced balance. But when the monthly payments stops, then the balances continue to grow because of the late fees and ongoing interests.
Consumers may arrange their own settlements by using advices found in different sources. They may hire lawyers to act for them. They may also opt for settlement companies.
Settlement consultants facilitate settlement programs for consumers who are overwhelmed with massive debt or who are bankruptcy as the last option. This process is also known as debt negotiation and these consultants are experienced with this aggressive and often successful process for management and reduction.
Creditors are often willing to accept less than the original balance through negotiation because they probably realize that some money received is better than no money received if the creditor chooses to file for bankruptcy protection. Creditors probably know that they are far more likely to receive payment of any level by allowing for a lower total payment. Consultants and counselors often develop relationship with creditors and can use this connection to the consumer’s advantage as well.
After the dues are settled by a Best Debt settlement plan, the creditor typically sends out a letter saying that the obligation was paid and informs the big three credit bureaus about the fulfilled credit obligation. This could help to repair any damaged credit scores and thus allows the debtor to begin rebuild their financial health.
The consultants are experienced in helping with this process by educating the consumer about money matters so that the cycle is not repeated. While this option is a smart one for some people, there are drawbacks and an experienced consultant can help you to find out if this is the right choice for your unique situation.