How to Reduce Credit Card Debt Through a Legitimate Debt Settlement Process

The recent economic recession has seen above 10 % unemployment

. This has been due to the fact that many businesses have not been able to sustain this economic recession and have closed down. The result of this has been either unemployment or pay cuts. With this kind of economic scenario it has become difficult for people to meet all their expenses let alone make payments towards their debts.

Most of the people are trying to solve their debt problems through various debt relief methods. One of the most popular methods is debt elimination. The reason why it has gained popularity is that that this program gives the debtor an opportunity to reduce the total amount of debt legally.

Debt settlement also known as debt negotiation is a legal method in which both the creditor as well as the debtor agree on a reduced total debt amount as a full payment. One might ask why the creditor agrees to a reduced settlement amount as this would mean losing money. The reason for this is bankruptcy. If the customer who is facing financial difficulties files for bankruptcy the credit card companies are at a total loss. The loan is an unsecured loan hence no collateral is attached to it. Hence the creditors try to settle the account and recover some part of the loan.

The creditor should convince his debtor that the only other way out for them is through bankruptcy. If the creditor agrees to settle the account the debtor can negotiate a debt settlement by offering a certain amount of money as down payment. Usually the customer should start his offer from 25 % of the total amount and increase as negotiation proceeds. A successful negotiation can get the debtor a debt elimination of about 60 % of the total debt.

How to Reduce Credit Card Debt Through a Legitimate Debt Settlement Process

By: Arvel Bert

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