Debt Relief Settlement Explained
Last week I wrote an article titled Debt Relief Settlement. In that article I mentioned that I came across a website that focused on negotiating a debt relief settlement. Well, I thought that I would give them a run for the money and create my own debt settlement page.
Some times we all have trouble paying our bills. We start to rack up credit card debt, buy a house with a jumbo mortgage, max out our home equity line of credit, and forget to pay our taxes to the IRS. Yes, it is very easy to build up a lot of debt. Sometimes this debt can get out of control. Additionally, maybe we lose our jobs or don't get that raise of bonus that we just knew that we were going to get. That is where a debt relief settlement could be a good option for you.
What is a debt relief settlement?
A debt relief settlement is the act of negotiating a settlement with your creditors to pay them back an amount that you can afford to pay them back. You could get relief from paying these debts by filing for federal bankruptcy protection, but that might cause you to lose some of your assets. But with a debt settlement, you reach a mutual agreement with your lenders to pay back a fraction of the amount that you currently owe them.
Your creditors won't just automatically agree to settlement your debt less than the full amount. They have to believe that they are at risk of not getting paid back. This is when a debt settlement company can really help you to negotiate for debt relief settlement.
What is a debt settlement company?
A debt settlement company is a company that specializes in negotiating debt relief settlements. These companies have experience with getting lenders to accept repayment of less than the full amount of money owed to them. Most of us have never negotiated with our credit card companies. We do not know how to structure a debt settlement. Without the help of a debt settlement company we might not be able to get the debt relief that we need.
How do you pick a good debt settlement company?
Choosing a good debt settlement company is not an easy task. The debt settlement industry has a lot of dishonest companies as well as honest companies. There are competent debt settlement companies and there are debt settlement companies that you should avoid like the plague. So, it is very important that you check out a lot of debt settlement companies to make sure that you are choosing a really good one. You can check out a lot of these debt settlement companies by visiting the ones advertising on this site.
My next article will dig a little deeper in to how to choose a debt settlement company. So this article series will answer all of your questions about negotiating a debt relief settlement.
16 Responses to “Debt Relief Settlement Explained”
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Tom Roompot Says:
February 28th, 2008 at 8:37 amDebt relief system, eh ? Thats a MMO game I haven’t heard of
Good luck with seo 
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Tom Bates, CDA Says:
March 5th, 2008 at 4:22 amAs with most consumers, you may find yourself reaching out for financial assistance through one of many options to find stability. While searching for the right option, make sure and understand that your goal must be to learn all your rights and options. Keeping in mind there are end results to each of them. Let’s look at these options in detail along with the end results of each.
Debt Settlement: Debt Settlement has been around for decades, yet has not become a fully devolved industry. In theory, the higher the risk to the creditor the more likely they are to settle. In most cases a debt settlement company will have continued communication with several banks and lenders thus generating “contacts” at the banks or collection agencies. In most every situation the consumer that begins a settlement program will be concerned about their credit. I must ask what credit report? The only report they have is a report full or debt not credit. Being worried about your credit should be your last concern when faced with mounting debt. The focus should be trying to avoid wage garnishment, you could loose everything in your banks and up to 50% of your household income. Only an IAPDA Certified Debt Arbitrator would be qualified enough to discuss the option of debt settlement.
Further, In the search for a qualified company search out their BBB report on line at bbb.org
With Debt Settlement:
Avoid potential bankruptcies and the public record that comes with it
Resolve your delinquent accounts for far less than you owe (up to 60-70%)
Eliminate harassing phone calls
Create a manageable financial situation that agrees with your finances
Debt Consolidation: Is debt consolidation right for you? Debt consolidation is always a great way to bring resolve to debt as long as clients have a process in place before the consolidation to settle the debt. If there is no procedure in place to discount the amount owed, there is no real reason to conduct a consolidation loan. With Debt consolidation your simply addressing the symptoms not the illness. Lowering the monthly payment is somewhat beneficial, but the end result may not be what was desired. A simple trade out of loans does not lower the amount owed or monthly payment, and in most cases, clients are going to end up owing double what they started with. About 80% of borrowers use debt consolidations loans, bringing accounts to a zero balance, but end up owing another lender at a lower or longer rate/term. In most cases, people that go through debt consolidation will continue to use the accounts that were paid off, resulting in double the debt. The end result is, if clients have a well qualified debt settlement company that has a perfect reporting with the BBB and is IAPDA Certified, that company should handle all the negotiations before the debt consolidation and then they are sure to come out on top. End result with Debt Consolidation: Don’t be silly, You Can Not Borrow Your Way Out Of Debt. Your simply moving accounts around, and in most cases, you end up in double the debt. Often, consumers will use the equity in their home for this, and they are simply trading the most secure assets they will ever own to replace credit card debt. Unless you have a plan in place to combat the debt, Debt Consolidation is foolish banking.
Bankruptcy: First, if you reside in any of the following states you need to consult and IAPDA Certified Debt Arbitrator before wasting money on a bankruptcy attorney. These states are Texas, North and South Carolina, Florida, Pennsylvania, and Iowa. These states are much more consumer friendly and Debt Settlement is most likely your best option. As most of you already know, the Federal rules of Bankruptcy have changed to the greater good of the creditor. See here rules of Bankruptcy, thought this is not legal advice, it comes from the FTC. This is a must read for those considering Bankruptcy. As an option to bring full resolve and complete satisfaction to both your finances and the needs of your creditor you need full disclosure from any source you seek information. Here are a few companies to look out for, and have a poor track record.
Credit Solution Of America (Addison Texas) Over 400 BBB Complaints
Financial Rescue ( FTC LAW SUIT FILED)
Debt XS (Poor BBB record)
These are examples on unsatisfactory records with the BBB., Governmental actions and clear poor practice. With any of these decisions, you should know there is no looking back as anytime you alter the original agreement with your creditor you will take on risk.
Tom Bates,CDA
CEO-President
Absolute Debt Solutions
Absolute Credit Repair
http://www.absolutedebtsolutions.com -
Debt General Says:
March 5th, 2008 at 11:08 amYes. I are doing great job paying off debt like that. Keep doing it and get free.
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Sean Says:
March 27th, 2008 at 4:00 pmIs debt relief the same as an IVA in the UK.
I am doing this at the minute and its a life saver. -
Tom Bates, CDA Says:
March 29th, 2008 at 1:10 pmThere is no difference in your process in the UK and thos process here in the US.
Kind regards,
Tom Bates, CDA
http://www.absolutedebtsolutions.com -
UK Debt Consolidation Loans Says:
April 21st, 2008 at 6:23 pmMerging all your debts into your mortgage loan can be both good and bad as a solution for debt consolidation. With the current rate of interest you can certainly benefit from this low rate compared to an equivalent stand alone loan which is secured on your property. However, what some people fail to recognise is the increase in mortgage payments could become a struggle. Assuming that people are already struggling, and hence the reason to consolidate in the first place.
As such the persons property can become even more at risk if they can’y make the payments due to the increased mortgage. Another option would be to take out an unsecured loan. Although the interest is higher, the flip side is you won’t lose your prooperty if you can’t make payments.
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Tech Blog Says:
April 26th, 2008 at 5:39 amDebt can be like living in chains, I know from experience, the first step to getting free is getting organised and having a plan and structure in place to move forward and get it paid off once and for all!
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janni Says:
April 30th, 2008 at 10:36 amSome debt settlement firms will simply charge you a flat fee for their services, but the more common scenario is for them to charge you either a percentage of the total outstanding debt or a portion of the savings they provide through the negotiated settlement. With most debt relief negotiations, the debt relief company will negotiate a settlement with each of your creditors that will represent between 40% – 50% of the original debt amount.
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Jennie Says:
April 30th, 2008 at 3:53 pmSo many people have no idea of debt settlement or even other types of programs that are out their to help them our of debt. The amount of Americans that are in debt is a rising number each and every day. It is a trap, use one credit card to pay another and before you know it you are using the credit cards for every day things. Most people do not realize their is a problem till they can no longer afford the minimum payments on their credit cards and afford their other bills, house and car payments for example. Most people it seems turn to bankruptcy without doing any research of other means to get out of debt. Debt settlement is just one of the ways to help yourself become debt free. It is very important to research and see what is out their to best fit your needs. Also once you decide your best program, research the different companies. Their are scams out their but with a little bit of time, you can weed out the bad ones. One thing that you can ask is if they are registered with the Better Business Bureau. If they are then you can go to the BBB website and check them out. That can surely help with any decision. Good luck!
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Tom Bates, CDA Says:
May 26th, 2008 at 11:22 pmWell said.
The first line of education for those with financial needs is USOBA “United States Orginization of Bankruptcy Alternatives. Understanding your rights takes Honest Education. A debt settlement company with a “perfect BBB report” is registered with USOBA and has a 100% refund guarantee” is your most viable option.
Absolute Debt Solutions has every page of education you have to choose from and educates their clients before enrollment. We have never lost a client and have zero complaints as the only people in this program “belong” in the program.
Most all complaitns come from those consumers who should not have been approved for debt settlement in the first place.
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Debt Relief | Space Explorer Says:
July 10th, 2008 at 11:10 am[...] trouble paying your utility bills, or having trouble paying your mortgage, negotiating for some debt relief may help you to get back on your [...]
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Structured Settlement Guru Says:
August 13th, 2008 at 9:51 amThere is certainly a great deal of information regarding Debt Relief Settlements on the internet but your explanation is excellent. It is needed, and will be beneficial to many I am sure.
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Angelina Says:
September 22nd, 2008 at 6:57 amJust like you other article. This article is also full of informative.
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March 8th, 2010 at 2:03 amI had fun understanding this post. I want to see more on this subject.. Gives Thanks for writing this nice article.. Anyway, I’m going to sign to your rss and I wish you write great articles again soon.
February 20th, 2008 at 7:05 pm
Thanks for the post. I eagerly await your next article. I had no idea the there were such things as a debt settlement company. Thanks for keeping me informed!