Personal Debt Reduction – How Personal Debt Balances Can Be Easily Settled
Debt settlement is the process of reducing the amount of debt owed by negotiating a lower total amount with your creditors
. It is a relatively less painful method of eliminating debt when compared to filing for bankruptcy. Any individual having more than ten thousand dollars in accumulated debt is eligible to have the debt negotiated under this option. It can be undertaken by the debtors on their own or with the help of debt settlement companies who will negotiate with the creditors on their behalf. It is advised that you take the help of a good debt settlement company who can use their skill and expertise to get you the best deal.
Creditors are generally open to negotiation when you have defaulted in your payments for a couple of months or more. When the monthly minimum payments are being paid on time, creditors find it more profitable than settling off the debt. However, when the repayment defaults occur, they tend to get worried about being able to recover their money. This is more so now due to the economic recession and the spate of bankruptcy filings resulting from it. It is better for them to negotiate a debt settlement than risk losing all chances of recovering the money you owe them.
From the debtor's point of view, opting for debt settlement is any day a better option than filing for bankruptcy provided that the debt is of the unsecured type. Filing for bankruptcy means fighting a long and stressful legal battle which will also do a lot of damage to your credit rating now and in the future. It can result in loss of property as well as still being forced to pay off the debts. Your credit score will remain low for seven to ten years and leave a bankruptcy mark on your credit report. Debt settlement, on the other hand, does much less harm to your credit score. In fact, you can start to re-establish your credit while working through a debt settlement agreement and your credit score returns to normal when you complete the program. After your debts have been settled, your debts are settled, the debt to income ratio falls and that helps lift your score.
Personal Debt Reduction How Personal Debt Balances Can Be Easily Settled