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| Debt Settlement as a Solution to Your Financial Woes | October 12, 2008, 10:01 pm | visits: 18 | wordcount: 505
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By Brian E Miller
Are you being cornered by your creditors? Being deep in debt is a common problem these days so you aren't alone. Have you ever considered debt settlement as a solution to your financial woes? If that term is new to you please allow us to educate you on this subject. Its very simple actually, debt settlement is a process where your outstanding debts are eliminated and you are required to pay only a portion of what you originally owed your lender.
The way debt settlement works is you set aside a certain sum of money to build up a settlement fund. You don't make your monthly payments to the lender, but instead you save it. After you have saved a certain amount of money you then start negotiating with them for a single settlement. In some cases you can reduce your debt by 45% to 60%.
So why will your lenders agree to settle your loan at a reduce amount? Because they are safeguarding their investment. If you were to file for bankruptcy, they lose everything. By settling with you, they can at lease get some of what they are owed. When the debt settlement companies get involved, the creditor has less to worry about. They know that you want to repay your debt even if it's not the full amount. But at least they are recovering a good portion of the money the loaned otherwise they stand to lose all of the money they lent you. They also save on collection agency and collection attorney charges which may be as high as 40% of the funds recovered.
It is important to get in touch with a debt settlement company at the right time, because if you wait too long, your lender can sue you or turn the matter over to a collection agency. Once a collection agency gets involved, you can expect harassing phone calls. Messy lawsuits involve attorneys and even more fees.
You can negotiate the settlement yourself, but keep in mind that legitimate debt settlement companies have been doing this for quiet some time and they should know how to handle the situation. Just beware of companies promising to settle your debt very fast and for only a faction of what you owe as these companies are most likely to be scams.
There are advantages and disadvantages to debt settlement. One disadvantage is that it gets reported on your credit report, but it still may better than bankruptcy.
When it comes to the debt settlement company's fees, make sure you pay them only after the settlement is completed fully. Some companies tend to charge you large upfront fees and some would try to make you pay a monthly fee every month until the settlement is made. So buyer beware, know what you are getting into.
Ask questions and don't sign any contract until you are comfortable with them. Do a background check on the debt settlement company you are interested in. Alternately you can use a service that finds and pre-screens debt relief and debt settlement companies for you.
Brian Miller is founder of DebtSolution-Strategies.com a site dedicated to helping peope eliminate debt. Find more on debt settlement at http://www.debtsolution-strategies.com/debtsettlement.htm
Source:www.isnare.com | |
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