Many people are wondering if debt settlement really works.
Does Debt Settlement Really Work?
The short answer is “yes… but only if done right”.
Debt settlement is the process of negotiating with a creditor (usually your credit card companies, but it can also involve other unsecured debt such as medical bills, etc.) to pay off a percentage of your total debts at an agreed upon settlement amount. Most of the time, when people are considering the debt settlement process, they will be considering hiring a debt settlement company rather than than attempting to do it on their own.
While debt settlement companies make all kinds of claims about how much debt they settle or how much money they can save you, most of the debt settlement companies seem to claim that they can help you settle your debts with your creditors and save you somewhere between 40-60% of what you owe.
How Debt Settlement Works:
Debt settlement is a process of negotiation between you and your creditors. Creditors are aware that somewhere around 30% of the 1.5 million bankruptcies that occurred last year were on debt that was reasonably current. The reason for this is that many people “rob from Peter to pay Paul” – or they borrow from one credit card to pay for another. The sad truth is that this borrowing from one to pay another usually ends up where you are unable to make even the minimum monthly payments.
When you find yourself in a position where you cannot make your monthly payments, it is likely that your creditors will receive nothing – so they realize that often times they will get more money out of you in the debt settlement process than if they don’t engage you in it.
Because of this, creditors are willing to settle for less than you owe – it is really only a matter of how much less.
How Long Does Debt Settlement Take?
Generally speaking, the debt settlement process will normally take between 12 to 36 months — it is not an overnight solution. One of the benefits of the debt settlement process is that although it takes quite a while, debt settlement companies can normally get your creditors to stop harassing you when you are going through the process.
Certainly, there are many questions that people have about the pros and cons of debt settlement, but by knowing these simple things about debt settlement, hopefully you can make a more informed decision.
