Erasing Bad Credit Card Debt - Use Bankruptcy Threat To Settle Debt
Erasing Bad Credit Card Debt - Use Bankruptcy Threat To Settle Debt
The mantra of debt settlement is based on the use of the threat of bankruptcy to force the creditors to wipe out a certain percentage of the dues that the consumers have. The threat is put forward professionally by the professional negotiators dealing with the creditors. The creditors agree because they do not want bankruptcy. Let us find out what happens during settlement.
A consumer with at least $10k of combined debt hires a professional settlement firm. The negotiator from the firm creates a plan for repayment by using the information provided by the consumer and then sends it to the creditor stating that the consumer seeks settlement because of financial troubles which is not allowing the consumer to repay the debt.
On the advise of the negotiator, the debtor goes delinquent and send across the message to the lender that financial trouble is not allowing the debtor to repay the debt. The creditor then sells off the debt to an agency for collection. When the deal between the agency and the creditor is completed, the negotiator comes to the forefront and offers about 50% of the debt repayment in bulk. At this point, the negotiator threatens the lender of an imminent bankruptcy filing by the consumer in case of the offer being declined by the lender. The lender is thereby forced to agree as bankruptcy is not what the creditor wants.
A new agreement is signed between the creditor and the consumer and then the consumer needs to repay the remaining amount of the money to the creditor in bulk and get out of the debt. This is how the process works using the threat of bankruptcy.
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.