Using Debt Settlement to Lower Your Debt

Introduction

Debt settlement may be referred to as the kind of settlement where you and your creditor come to terms and they agree to accept a percentage of the owed amount as a full payment. While it seems to be very simple on paper, debt settlement can actually be a very complicated process. An overview of using debt settlement to lower your debts is given in the paragraphs below.

Working of debt settlements

The aim behind debt settlement is to pay a much smaller amount in comparison to what you owe to different creditors like credit card companies, banks, etc. The offer is usually valid for unsecured debts while there are certain loan types that do not offer debt settlements. These may include house loans, car loans, student loans, etc. When it comes to availing the debt settlement option, there are three possible courses of action to pursue it.

Debt settlement companies:

When you pursue debt settlement through a debt settlement company, you halt making payments to the creditors and start making them to the settlement company. The company accumulates your money into a fixed amount and negotiates with your creditors after summing up a decent lump sum. For these services, the company usually charges you with a certain amount of fee as well.

Debt settlement lawyers

Majority of the people usually go for debt settlement companies when they are looking to opt this financial choice. But you can also go for a debt settlement lawyer as they can do the same thing for you. It is strongly recommended to figure out the fees charged by the lawyer before you sign them on for your case.

Do it yourself:

The final way of pursuing debt settlements is to do it yourself. When you are getting late on making your payments, there is no harm in showing up to your creditor and negotiate a debt settlement by yourself. Several banks even offer hardship outreach programs that are designed to help people out in this regard.