How Do Debt Settlement Programs Work
Debt settlement programs have helped a lot of people to get out of debt and save money from their principal balance and interest fees. Each situation is going to be different, but the basic process will be listed for those who have signed up for debt settlement programs.
The very first step is to talk to a person at a debt settlement company.
You may think that debt settlement is best for you, but there are times when you are in a certain situation that you will find other options better off for you like bankruptcy, consumer proposal, credit counseling, or debt consolidation.
Before you contact the company, you should know that debt settlement is best for medium sized debts and only those who have more than $10,000 in debt will use debt settlement. Those who happen to owe less can make a few payments will do better with using a low interest consolidation loan or credit counseling.
If debt settlement is best for you, then enroll in a program that will work with you and your creditors. The goal is to reduce how much you owe and not just the interest rates. When you work with creditors on a daily basis, your representative will know the best ways to get them to look at the situation in a more favorable manner. Due to this expertise, you will end up with great debt reduction offers from the creditors that you wouldn’t have gotten when trying to do it on your own. Based on your financial status and credit history, you could reduce the principal amount that is owed from 80% to 20%.
Not all debt types that can be settled are unsecured debts like consumer loans, car loans, and credit cards. Secure debts like mortgages will not qualify in debt settlements.
Your new payment process will begin at the time when your representative is negotiating with the creditors. Once you have been enrolled into a program, you will begin to make payments which go into a special account. This is what will pay your creditors once an agreed upon settlement has been reached. This payment will be at one time and you will see your debts vanish as you start to pay them off. When everything is done, you will be debt free.
Once the Final Creditor is Paid Off
Once your last creditor has been paid, you will be debt free and you may even have a graduation package which has copies of the settlement agreements and some information that you can use to help you rebuild your finances. The money that you don’t have to use to pay creditors can be now be saved.
It is time to speak with someone about what your options are. Fill out the debt relief form and learn what option is best for you.