Credit Card Debt Settlement - How Debt Settlement Advisors Negotiate With Borrowers And Lenders

Credit card debt settlement has grown exponentially over the years

. With the number of consumers now in financial crisis, there are more and more companies that have been created to help people get out of debt and stay that way. The main job of a debt settlement company is just that, to negotiate with the banks and lenders to reduce the payments and remove fees and charges that have been added. The new Federal debt relief laws have helped consumers find legitimate companies and it has weeded out the fraudulent ones. This has strengthened the entire industry over all, as well as helped more people take control and get back on track financially.

So, in the end a debt settlement company is a go among for the consumer and the lenders. They work with both parties to create the best solution, so that both are happy in the end. Though they work for the consumer, they are also looking for a resolve to the situation that the lenders and banks will agree with. Which in the end means, lower payments for the consumer and the bad debt eliminated from the creditors books. But, what do these negotiations consist of? Here is the step by step process of what a debt settlement company does.

A settlement firm is the only one that talks with the creditors and the consumers. All interaction among the two parties is stopped.

The person seeking help turns over all financial information to the settlement company because they are not able to pay the debt back.

A settlement company goes through the financial documents and determines the best repayment plan for the consumer.

Once the company has gone through all the information and has a plan in hand ready, they send a letter to the creditors on behalf of the consumer. The letter itself is an explanation of why the consumer cannot repay the debt (such as loss of job, divorce or death in the family), the debt information that the consumer owes and the repayment plan that the company has come up with. The importance of the letter, is that the creditors now cannot take legal action the consumers, now that the consumer is in a formal repayment plan. Also, this letter will be sent to every creditor that the consumer owes.

Now that the letters are sent, the consumer, under the advice of the debt settlement company, will stop paying all bills and making any payments.

When the creditor receives the letter, they sell the debt to a collection agency that the settlement company tracks.

The settlement firm will contact the creditor at this point to negotiate the debt. The creditor is offered 30-50 cents per dollar as against 20-30 cents per dollar, which is paid by the collection agency. The creditor also receives an implicit threat that the consumer will not be left with other alternative but to file for bankruptcy in case the creditor declines the deal. The creditor wants to get back at least some money and hence, the debt is lowered by at least half. Fees and charges are removed, as well as interest many times too. This is done on behalf of the consumer and there is no interaction among the creditor or the person seeking help.

Lastly, when the creditor agrees to the negotiations, the consumer than signs a settlement agreement and begins to make the payments according to the new terms and conditions.

How long it takes for the credit card debt settlement firm to complete negotiations will vary. This will depend on the number of lenders, the amount of debt and how quick lenders are to respond to letters and documents.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate debt help in your state.

Credit Card Debt Settlement - How Debt Settlement Advisors Negotiate With Borrowers And Lenders

By: pollstump

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