Debt Settlement

Debt Settlement

Settling Up

That's exactly what debt settlement is--settling up. Through rigorous negotiation, a debt settlement agent can get your creditors to reduce the amount you owe by up to 60-80%. The debt settlement company will generally ask you how much money you have saved up and try to get your creditors to work with that figure. They know the creditors will want their money right away, which is why they try to work with what you have. If your creditors won't go low enough, some debt settlement companies might be able to get them to give you 1-3 years to pay the new, lower amount off.

Getting 60-80% in reductions sounds almost too good to be true, right? Well, it almost is. See, your creditors don't like debt settlement. They end up on the short end of the stick, getting far less than what they are actually owed. The only reason they agree to it is because they know the next step is usually non-payment or bankruptcy. If they agree to a debt settlement, they will report it to the three major credit reporting agencies, and it will go down on your permanent record. (Okay, it might only stay there for seven years, and it's like a late payment, but it's there, nonetheless.) Some people don't want to risk their credit rating, but others see a debt settlement on their credit report as being far better than having anything worse on it.

Still, some people might prefer a safer way to get rid of their debt, like debt consolidation, a debt consolidation loan or a debt consolidation mortgage. All of these are effective debt management programs that can give you the debt relief you need, mostly in five years or so.