One of the options for individuals who are unable to keep up with debt payments is debt settlement. This is a worthwhile alternative to debt management strategies such as bankruptcy as it allows you to get rid of a substantial amount of debt with a lower amount of money than you actually owe. People can negotiate their debt settlements or seek professional assistance through companies that can handle the process for them.
Understanding Debt Settlement
Settling debt with a lender or entity that you owe involves offering to pay them less than what you owe them. This will be in exchange for the opportunity to have the remainder of the debt forgiven. In some cases, you will able to negotiate the debt downwards by as much as 30% or more of the initial amount that is owed.
Debt settlement works best for a debt without collateral or unsecured loans. For creditors who have found it challenging to collect debt from debtors, a negotiated amount is ideally paid in a single lump sum shortly after the two parties make an agreement.
Debt Settlement Benefits
Negotiating and settling debt is regarded as a better option than resorting to bankruptcy. It helps you clear debt much faster than paying off your loans through conventional methods. The negotiation process may make it easier for you to deal with debt and prevent you from ignoring it and making the situation worse.
Settling debt also enables you to make significant progress towards getting rid of debt. This is essential for peace of mind when you have been concerned about being unable to pay current debts due to challenging financial circumstances. Read debt settlement reviews here.
Debt Settlement Negotiation
- Embark on the process of negotiating debt settlement effectively by ensuring that you have a list of the debts and calculations of the amount you owe. Make an effort to save up a reasonable percentage of what you currently owe before getting in touch with the creditor to make an offer. The offer entails suggesting the amount for full settlement.
- Start strategically with a conservative figure in relation to what you have saved or the cash that you have access to. You will need to be able to negotiate a payment amount that the creditor will deem acceptable.
- If the creditor accepts the negotiated amount as full payment, you can request for a letter that states the agreement before you make the payment. This protects you from the possibility of the company claiming that you owe them money.
- If you have a number of debts to settle with different lenders, you will implement a similar process with other debts.
Debt Settlement Companies
People often hire debt settlement companies and specialists to help them settle their debts. These types of companies contact creditors on their client’s behalf and carry out settlement negotiations. In the meantime, the client saves the money through monthly payments that are directed towards negotiating settlements. If you want to work with a debt settlement firm, carefully research the options that are available and ensure that you hire a legitimate and professional service.