Debt Reduction through Debt Settlement Negotiation

Debt Reduction through debt settlement negotiation is a new viable option for those consumers that, because of the current economic downturn, are struggling to make even their minimum monthly payments for their unsecure debt such as credit card, and medical bills.  Extra pressure has been added by creditors raising credit card interest rates to very high levels, sometime peaking as high as 29%, lowering available credit lines, and many times turning accounts over to collectors.  With no debt reduction in sight, it is hard to know where to get good advice.  One debt relief alternative is bankruptcy, but it is much harder to get approved to do a bankruptcy today, and no one wants bankruptcy on their credit record for up to 10 years.

One new and effective debt reduction alternative is debt settlement.  In debt settlement, bankruptcy is not needed because the debt settlement agency negotiates with the creditors to reduce the amount owed by as much 60%.   This is done by negotiating with the creditors in bulk (for multiple consumers at once), instead of with just a single consumer's account.  Because they represent many consumer accounts, the debt settlement companies have more leverage and are able to negotiate a better deal with the creditors.

Some may inquire as to why creditors would even settle for lower payoff amounts?  First, by using collection agencies, creditors will only recover 7-15% of the amount due.  In debt settlement, they'll receive up to 50% of the amount owed!  Second, creditors know that if the consumer does file bankruptcy, they will collect nothing.

For the consumer, debt reduction is accomplished because the debt settlement agency is able to set up monthly payments that are nearly half of what they are currently expected to pay on their minimum payments.  These payments are then put into a trust account that only the consumer has access to.  Each time an account is settled, the debt settlement company must get the consumer's ok to pay-off its accounts.  The best thing about debt settlement is that the consumer will be debt free (depending on the amount owed) in just 2-3 years!  All parties involved come out ahead.