Debt Settlement Programs
As more and more American suffer from mounting bills and crippling personal debt loads, an increasing number of unhappy borrowers are turning to debt settlement as a solution to their financial problems. Unlike bankruptcies, there’s no threat of possession seizure or court-mandated living budgets and credit records are relatively unaffected. Also, unlike Consumer Credit Counseling programs, successful debt settlement negotiations eliminate a percentage of the borrower’s debts. This article seeks to illustrate the various reasons why settlement programs have become so popular in recent years.
· Some Debts Are Eliminated.
This is obviously the most attractive element for most borrowers who’ve fallen behind in their payments. Essentially, settlement professionals begin a series of negotiations with credit card companies with the hopes that the creditors will knock off some portion of existing balances (generally between forty to sixty percent) in exchange for a strictly mandated repayment schedule (generally between three to five years). This won’t work for all debts. Secured loans tied to vehicles that could be repossessed or mortgages tied to homes that could be foreclosed upon don’t allow the same leverage, of course, and tax liens, alimony debts or penalties assessed from criminal trials clearly cannot be touched.
· Creditors Are Satisfied.
The credit card companies are usually eager to negotiate a reduction of existing balances to make sure they will receive at least a portion of what was owed. After all, if the borrower were to file for bankruptcy and successfully declare Chapter 7 protection, the creditors wouldn’t be able to collect any funds at all. (this is one of the reasons the borrowers should ensure they’re working with qualified professionals who have previously negotiated with all relevant creditors)
· Bankruptcy’s Avoided.
One of the greatest advantages of debt settlement is one can avoid bankruptcy. The elongated procedure and life-long stigma borrowers face by suffering bankruptcy protection can prevent consumers from employment opportunities, security clearances and home ownership. With current legislation, most people filing for bankruptcy are regularly forced into Chapter 13 repayment programs similar to debt settlement (though far harsher considering court-mandated trustees wholly determine an individual or family’s budget and life expenses during the abbreviated repayment schedule). Even for those that successfully qualify for Chapter 7 bankruptcy protection, the new laws may force unlucky borrowers’ possessions to be seized for auction in order to repay creditors.
· Credit Reports Aren’t Ruined.
Upon a successful debt settlement negotiation and repayment program, notes will be sent to the three major credit bureaus that indicate debts have been satisfactorily settled. This isn’t quite the same as complete repayment, of course, but far more acceptable to future credit analysts than a credit report notation of bankruptcy protection, charge-off or Consumer Credit Counseling. For any debtor that hopes to one day restore their credit rating to top scores, debt settlement can be the most beneficial alternative next to a never interrupted series of regularly scheduled payments.
John is a DJ and radio producer by trade who has performed in the U.S., Russia, Turkey, Macedonia, Serbia & Kosovo. Through a strange twist of fate he found himself working in the debt consolidation and debt settlement field in Chicago. John has a great interest in charity work as well. His other interests include fitness, science & technology, modern medicine, poltics, world events and pop culture. Article Source:http://www.articlesbase.com/personal-finance-articles/debt-settlement-programs-878265.html
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