A quick guide to what debt settlement is about
There are a few quick points that you need to know about when it comes to the debt settlement process. There are many people that think that debt settlement is going to be the best possible solution to their debt problem due to the fact that the debt settlement company is telling you that they can negotiate with your creditors to have your original debts reduced a good amount into a lump sum that will satisfy the creditor’s needs and also get your debt reduced at the same time. However, there are a few things that you need to remember when you are doing this.
The first thing to remember is that a settled debt is not the same as a debt that is paid in full. It simply means that the creditor chose to allow the lower settlement so that they will be getting some of the original amount of money that you owe them. This will also go against your credit because you have to be more than three months behind on paying your bills to even think about going through this process. Something else that you many not realize is that going through debt settlement is not the same as going through the debt consolidation and credit counseling process in the fact that you are not going to stop the collections calls from coming all the time.
Once you sign the agreement to work with a debt settlement company you will start to send a check for the new lower monthly payment to them so that they can them turn around and pay the creditors the monthly amount that has been agreed to. The thing that you will need to know about here is that you are not going to be paying off those debts right away. The reason for this is that the debt settlement company will take their fees right off the top first, and this must be satisfied before your debts ever get paid down. This is not being said to discourage anyone from using debt settlement as an avenue to pay down their debts, just to let everyone know what is ahead for them in this process.
If you can succeed in getting the fees (both upfront and monthly fees) paid and are actually able to start seeing those balances on your monthly statements go down, it is going to take a good bit of time to get the settlement amount paid off. There are many people for whom this route has actually worked in the past and even currently; however, there are more people who actually end up in a much worse financial situation than they were in before they started the debt settlement process. You really need to read up on everything that you possibly can read and research this very carefully so that you have all of the information at hand that you can possibly get to be able to decide for yourself if this really is the right avenue for you to be taking.
