Debt settlement is a negotiation undertaken with an unsecured lender of a borrower. Most commonly, unsecured lenders agree to settle for a large portion of the debt: around 50%, although results will vary widely depending on the lender and the borrower. When settlements are reached, both parties sign documents stating that the matter has been settled. This then marks the end of the debt management process. The debt management company collects the debt from the borrower and marks it as paid.
The primary advantage to debt settlement is that the creditor does not have to pay the entire sum. However, this is only the benefit if the settlement amount is relatively small. Even a small amount can go a long way to making the debt settlement unprofitable for the creditor. In other words, a debt settlement is lucrative only if it produces a bigger lump-sum payment than the outstanding debt. Otherwise, it is only going to be a loss to the creditor.
There are many debt settlement programs available to consumers today. A consumer can contact a debt settlement company directly. Many credit card companies offer debt settlement programs. These companies can also help consumers with negotiating with their creditors. Debt relief networks also provide services for consumers who are looking for these settlements.
debt settlement company also offer consumers the option of going through a discount debt settlement program. Consumers can enroll in such a program to pay a settlement agency instead of hiring a private attorney. A discount program allows the individual to settle their own debts at a reduced rate. Such agencies are not required to hire attorneys. Instead, they just receive payments from the creditors on behalf of their clients and divide the money amongst their clients.
The debt settlement process begins after the individual has decided to opt for this procedure. This can be started by contacting a legitimate debt settlement firm. The firm will draw up a contract that stipulates all terms and conditions between the creditor and the debtor. Such contract will include all the terms and conditions on which the creditor will require the debtor to repay.
Once this is done, the individual will be required to make monthly payments to the company. The monthly payments are used to pay off the company which is taking care of paying off the money to the creditors. Once this process is completed, the creditors will be able to contact the individual for repayment. The individual can still keep paying the monthly installments to the debt settlement services until all debts are settled.