Out Of Control Credit Card Debt? - How To Fight Back Against Creditors And Settle Bad Debt

Out Of Control Credit Card Debt? - How To Fight Back Against Creditors And Settle Bad Debt

Out of control credit card debt has become very common. There are millions of consumers who are in the same trouble and they are looking for a way out of the trouble. Many of these people have opted for bankruptcy and many are still wondering what to do. But, why are these people not filing for bankruptcy? There are two major reasons for this. First, bankruptcy causes a number of financial troubles for the consumers in the future and second, the bankruptcy laws have changed and filing for bankruptcy is no longer as simple as one, two, three...

But, is there an alternative way to fight back against the creditors and settle bad debt? Yes, there definitely a way to do so and this method is far better that the traditional method of bankruptcy. The only aspect where this method falls short of the traditional school of debt relief is that the method is capable of eliminating only 50% and maximum up to 70% of the whole due as against 100% debt elimination by the method of bankruptcy.

The method of settlement depends on the threat of bankruptcy and also on the negotiation power of the negotiator dealing with the creditor. The method ensures that the consumers do not lose their credit score and that they remain prime consumers even after the debt is eliminated. The two very basic standing pillars for the method of settlement are:

The consumer must be burdened with a bad debt of $10,000 or more.

The bad debt that the consumers have must be in one place. This means that if the consumer has debts spread with several creditors, he or she needs to use the method of balance transfer to consolidate the debt in one place.

With these two criteria being satisfied, it is always suggested that the consumers must hire a professional debt settlement firm instead of negotiating with the creditors on their own. This is because of the fact that the professional firms have the proper know how required to deal with the bankers and they know how to professionally put forward the threat of bankruptcy without offending the creditors but yet forcing the lenders to agree to the offer made by the negotiators. With the aid of a professional settlement firm, the consumers can get a minimum elimination of 50 percent of the total due and sometimes, depending on the experience and ability of the negotiators, the consumers can get an elimination of 70 percent.

Since the consumers do not have foolproof knowledge of the banking system, the creditors will always take an edge over the consumers if the debtors go for do it yourself arbitration. The creditors will, in that case, force the consumers to pay more and the actual elimination earned by the consumers will have a maximum outer limit of 30 percent.

What happens prior to settlement negotiation?

Let us assume that you, as a consumer, are looking for debt settlement to fight back the creditors and eliminate bad debt and that you have decided to hire a professional settlement firm for the purpose of negotiation. The negotiator will first talk to you and will acquire all the information required for the actual negotiation. The information that you furnish regarding your debt, income and expenditure must be accurate in every sense. A repayment plan is created by the creditor with the help of the information you provide. This is because of the fact that the creditors always look for a repayment plan when a consumer opts for settlement. In absence of such repayment plan, the creditors will simply turn down any approach made by the negotiator on behalf of you.

The negotiator then shoots a letter to the creditor and inform that you are facing financial problems due to circumstances which are unavoidable and that you want settlement. Appropriate proofs for such a claim of financial trouble will be attached with the letter. The creditor will be forced not to take any legal actions against you when the letter is received. Simultaneously on the other hand, the negotiator will ask you to go for a tough decision. You will be asked to go delinquent. This deliberate delinquency is meant to ensure that the message of financial trouble reaches the creditor.

What happens then?

This is where the seeds of real negotiation start taking a bigger shape. Once you go delinquent, the creditor gets the message that you are not going to pay the debt in full and that you are looking for settlement. The creditor at that point of time decides to sell the debt to a collection agency. However, this sale actually takes place after a buffer period of 90 days to 120 days. The creditor sells the debt to the collection agency for a mere 20 cents to 30 cents per dime (dollar).

The job of the negotiator is to keep a track of the sale and once the creditor and the agency signs the deal, the negotiator gets in direct touch with the creditor. Once the negotiator comes on the silver screen, the scene changes. The negotiator approaches the creditor and explains that the consumer can give 30 percent to 50 percent of the total due in bulk provided that the creditor assures and agrees in eliminating the remaining amount of the money. The negotiator goes explaining further that with the collection agency in action, it is true that the consumer might repay the debt in full but the actual amount of money that hits the creditor's vault is 20 percent to 30 percent of the total due, which is far less than what the creditor can actually get back with debt settlement.

While putting forward this explanation and offer, the negotiator implicitly threatens the lender of bankruptcy filing and states that if the creditor wants to stick with the collection agency, you will be hard pressed to file for bankruptcy because you are in financial trouble and you will never be able to repay the debt in full. The creditor never wants you to file for bankruptcy because if you do so and if you succeed in bankruptcy filing, the creditor will lose the whole money.

This is where the creditor acts wisely and accepts the offer made by the negotiator on your behalf and decides to accept 50 percent of the due while eliminating the rest. The creditor will then create a new agreement and you will have to sign the same along with the creditor and make sure that you repay the 50 percent of the bad debt within the specified time and according to the terms and conditions of the new agreement. Any failure to do so will be futile and will deem to contract to be violated and you will then have to repay the debt in full without excuses.

However, if you pay the amount of the money agreed upon with the creditor, you will get a clean cheat and you will be treated as a responsible consumer who pays his or her debt on time. This is how you fight back your creditors and eliminate bad debt.

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.

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