With the rise of the credit card economy, more and more Americans are finding it difficult to deal with mounting bills and an ever escalating debt load. As this all has happened, new industries have sprouted up to help ordinary consumers pull themselves out of the financial burdens - chief among them the debt settlement industry.
In a successful debt settlement negotiation, certified professionals talk to credit card companies in order to convince them to reduce debt balances - sometimes by as much as sixty percent. The lenders generally agree to an even handed debt reduction in exchange for assurances that the debtor will not declare bankruptcy (thereby risking a loss of all unsecured debts owed to the lenders) while the borrowers have a good portion of their debts eliminated without the disastrous credit consequences bankruptcy protection threatens.
Alongside promises to refrain from bankruptcy, the borrower also enters into a strictly defined payment schedule typically lasting from three to five years. This pleases the lenders, of course, but also inevitably helps the borrower. The single payment system's much easier for most borrowers to keep track of and, once they've become accustomed to regular obligations, borrowers should quickly repair their credit rating and learn proper habits that should prevent debt troubles in the future. In short, because of their relative advantages as to the borrowers' credit and the immediate reduction in total debt loads, debt settlement negotiation programs should be investigated by any borrower who finds themselves crippled by bills.
As mentioned in my author bio I have worked within the debt relief community for over a decade now and seen the advantages and drawbacks of all aspects from debt settlement negotiations to Chapter 7 and Chapter 13 bankruptcy protection to credit repair. In the past twelve years, I've learned a good deal about the untold consequences and hidden secrets surrounding debt relief that I'm happy to share with curious debtors.
How does it work?
Though the entire notion may seem inordinately complicated to the average consumer - after all, we're taught to believe that debts are forever and the only solution to unpayable bills would be the credit destroying option of bankruptcy - but debt settlement negotiation makes a good deal of sense when you think about it. Obviously, above all else, creditors want to be sure that the borrowers do not go bankrupt leaving them with no recourse. At the same point, sending debts to collection agencies leaves them with only a small percentage of the original moneys owed, and, should the lenders themselves sue to recover, the costs of litigation can often outweigh the sums collected. As to why borrowers agree to the debt settlement process, this should be even more obvious. Successful negotiations will sudden eliminate a good portion - perhaps half of the debt load - without overly negative repercussions as to credit reports or FICO credit scores.
Then why can't debtors do this themselves?
While the overall process is simple, there's still a good deal of specific information only available to experienced negotiation professionals. Settlement specialists understand precisely how little the creditors stand to receive should they sell the debt balances to collection agents and can bargain accordingly. If the debt has already been sold, then the professional would have an idea (knowing the practices of credit card companies and collection agents) precisely how much the agency has to gain. Debt professionals are certified for a reason, after all, but, even beyond that, they tend to very good at the art of negotiation. Anyone can do their own taxes, just about, or sell their own houses, but accountants and realtors are quite demonstrably worth whatever additional costs may be involved.
Furthermore, besides the clear advantage of experience, continued dealings with the same lenders have the additional benefits that most business relationships enjoy. While debt settlement professionals are not financially tied to credit card companies in the way that consumer credit counseling firms depend upon lenders for the majority of their incomes, a mutually advantageous relationship nevertheless exists. In some cases, the settlement companies and lenders even draw up contracts that guarantee savings at a given rate for all borrowers. No matter the specific relationship, though, professional negotiators - by dint of training, experience, and, in most cases, a natural talent - are going to have a better chance at successful settlements. They understand how to best represent the borrower's situation in the context of financial pitfalls and economic troubles that borrowers themselves may be too embarrassed to mention to their lenders. Most importantly, there will always be attempts by the creditors toward paperwork containing hidden penalties or garbled prose that inevitably offers less settlement than was initially promised - sometimes, credit card companies have manipulated borrowers toward helplessly agreeing to repay all that was owed. Certified debt settlement specialists would never let that happen. They understand all the tricks and know the creditors most likely to attempt them
