Debt Settlement Relief - How Does a Legitimate Debt Settlement Work?
Debt Settlement Relief - How Does a Legitimate Debt Settlement Work
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Every year we find that increasing numbers of people are having financial trouble and are starting to build up substantial debt that is harder and harder to pay back because of high interest rates. But there are ways to get out of debt, ways that, in time, will allow you to regain your prosperity without major legal problems.
Debt settlement is basically a deal between the debtor and the creditor, where the latter agrees to cut the debt with about fifty percent, and the former is left with the remainder. This is a good deal for the creditor because he gets at least a part of their money back, with the debtor being able to better afford the monthly payments and being rid of debt in about three years.
The negotiations are usually carried out with the help of an agency, preferably one with some sort of legal service that will keep the debtor from getting into legal trouble and that will also help with the debt settlement letter. This letter is the way through which the debtor says to the debtor that he is no longer able to pay his debt, but that he is willing to pay at least a part of it.
The most important thing about the process is having a sound payment plan - this will insure that the debtor will be able to pay everything back without the danger of not being able to cope with the situation. The creditor will usually set a lower interest and will also cut annual fees and payment penalties and in the end the remainder debt is much easier to manage.
Fees for the negotiation agency are usually included into the monthly payments, but it's important that they not be the only thing that is being paid for the first number of installments because then you risk a lawsuit form the creditor. It's best to check this aspect before you decide to sign a contract with a certain agency.
Debt settlement is not something to be scared of - with the right counseling you can find that your debt will soon become a thing of the past and that your credit score could start to go up once again.