The bottom line of a debt settlement process is to negotiate with your creditor so you can be given pardon for your inability to pay off your debts. Specifically, they will waive off late payment charges and ultimately allow you to pay for only a portion of the original balance.
While there is no doubt that some people can manage this on their own, there are negotiation skills and industry expertise needed to accomplish the intended agreement. Creditors may be intimidating and you may not be the best person to handle it. With this idea in mind, debt relief companies are available to help you reach an agreement with your creditors. They will work on your behalf and will assure those you owe that you will be paying off diligently under the new payment terms.
It should be understood that debt settlement only works for specific situations and debt types. For instance, this is not applicable to student loans or mortgages. This is usually best for credit card debts.
Identifying the Steps in a Debt Settlement Process
Once you have selected the debt relief company to help you settle your debts, the first step will involve discussing your unique financial situation. This is needed so you will know just how much you can afford to pay for. You will then decide how you will approach the debt settlement process.
One approach involves a lump sum payment. You will save up an amount that will pay off the debt once and for all. The other approach is a new term settlement that will provide you with a new payment period and lower monthly amount.
When you have laid out your plans, you will have to set aside an agreed amount to fund the settlement amount that will be offered to the creditor. This amount is based on your debt balance, income and basic necessity expenses.
Remember that at this point, the creditor is still unaware of your intentions for debt settlement. All they know is that you have stopped paying your monthly dues and they will probably start harassing you through phone calls and mails. You should maintain your silence and you continuously put aside money in the FDIC insured account that the debt relief expert have arranged for you.
As you are building up your funds, the debt relief company will get in touch with the creditor to negotiate on your behalf. They will show proof that you are unable to pay and will try to get them to agree to new payment terms.
This happens around 90-180 days after you have stopped paying. This is the ideal time to do so because the creditor should have “charged off” your debt – meaning, they have taken a tax break and have written you off as a “bad debt”.
The creditor will conduct their own investigation based on what had been presented to them. This includes checking on your payment behavior with your other creditors. Once they have found that there is no other way but to settle, you will be informed through the debt relief company representing you. They will send a written “settlement offer” that you will have to approve.
When that is in order, the funds from the account you have secretly been saving will be released depending on the amount that is written in the offer.
This debt settlement process will be repeated until such time that you have paid off all of your debts completely.
NationalDebtRelief.com is a debt relief company that can aid you in negotiating with your creditors. We encourage you to take that bold step in settling your financial obligations by calling us. The initial consultation is free. Let us help you gain financial freedom.