Debt Settlement Provides Debt Relief from Credit Card and Other Debt

Due to the current economic downturn, many consumers are struggling to make even their minimum monthly payments for their credit card, medical bills, and other unsecure debt. The creditors have added further pressure by raising credit card interest rates to well over 20%, lowering available credit limits, and many times turning accounts over to collection agencies. With no debt relief in sight, it is hard to know where to turn. Bankruptcy is one debt relief alternative, but it is much harder today to go that route and many cringe at the thought of a bankruptcy on their credit record for 10 years.

One highly effective debt relief alternative is debt settlement. With debt settlement, bankruptcy is avoided because the debt settlement agency negotiates down the debt amount by as much as 60%. How this is done is really quite simple. Instead of approaching the creditors with just a single consumer’s debt amount, the debt settlement agency settles with the creditors in bulk. Because they represent many creditor accounts, there is more room for negotiating down the balances due.

You may ask why would creditors even settle for such low pay-offs? First, creditors know that by using collection agencies, they will recover only 7-15% of the amount due. With debt settlement, they’ll receive 40-50% of the amount owed! Second, creditors know that if the consumer does file bankruptcy, they will collect nothing of the amount owed.

For the consumer, debt relief is accomplished because the debt settlement agency is able to set up monthly payments that are typically half of what the consumer is currently expected to pay on their minimum payments. Plus, the consumer will be debt free in typically just 2-3 years! It’s a win-win situation for all parties involved.