subject: Credit Card Debt Settlement - How Do Debt Reduction Programs Really Work? [print this page] Credit Card Debt Settlement - How Do Debt Reduction Programs Really Work?
Debt settlement is a process which helps in reduction of debt. Here the creditor agrees to reduce the debt amount by a certain percentage if the debtor pays a certain amount of money upfront. This payment made by the debtor would be considered as full payment by the creditor.
If the debtor continues to make the minimum payment towards his account then his creditors will not entertain the idea of debt settlement. Mostly the customer has to miss out on a few of his payments to be taken seriously by the creditors. However, if the payments are missed the total balance would go up due to the added late charges as well as the interest rate.
Debt settlement process is a simple procedure which can help the debtor with his unsecured debts. To qualify for this program a debtor should have debt amount of ten thousand dollars or more in unsecured debt. A debtor needs to get in touch with his creditor and ask for a debt negotiation. The creditors would oblige if only for formality. During the initial meeting customer will have to convince the creditor that the only other way out of debt for him is to file for bankruptcy.
If the creditor agrees, he will have to offer settlement money to them. This settlement amount will be a certain percentage of the total debt which the customer will have to pay upfront. In case the customer does not have enough money to negotiate a deal, he can open an account to save that money within a certain period of time.
A successful negotiation can get a customer debt reduction of almost 40 % to 60 % of the total outstanding balance. This is a huge relief for any debtor. Hence many debtor facing difficulty are opting for this option to get out of debt.
Their are several debt relief options available in this market so it would be wise to speak with a debt relief specialist to determine which option makes the most financial sense for you. Whether it is credit counseling, debt settlement, debt consolidation, or bankruptcy, a debt relief specialist will be able to steer you in the right direction.
