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If your debt load has gotten out of hand, there are several alternatives that you can consider. One option is to go through a debt consolidation program and use the proceeds from the loan to pay off all your current obligations. A different approach is to talk with each of your creditors and attempt to arrange some sort of debt settlement. Depending on your personal circumstances, the latter strategy could be the best solution for your financial woes.

Understanding the Nature of Settlements
While some of the details may vary from one situation to another, the process of settlement involves entering into a period of negotiation with each of your creditors. The idea is to determine if those creditors would be willing to accept less than you actually owe in order to clear or settle the account. When this is the case, it is possible to set up a short-term schedule of payments and retire the debt quickly and easily.

The range of ways to structure this type of arrangement will depend on the policies and procedures of each of the creditors. You will find that some may be willing to settle for less than the actual account balance if you are able to forward that negotiated amount within a specific period of time. Others will be willing to accept the lower amount as long as a specific series of payments are made on time. The goal is to arrange the payments so that you can meet them with ease and not have to deal with any additional penalties or legal actions that would cause further financial distress.

What You Get from a Debt Settlement
There are a couple of benefits that you receive immediately with a settlement arrangement. The first is that your overall indebtedness is decreased by a significant amount. Having that much financial stress off your shoulders can be very freeing. In addition, most creditors will stop applying interest to the outstanding balance or at least reduce the interest rate that is applied while you make the payments. This also helps to minimize the amount of money you eventually pay to settle the outstanding balance.

As you pay off the accounts, most of your creditors will contact each of the credit reporting agencies and note that the accounts have been settled and that they are closed to new transactions. While the account closures are not necessarily the best thing, this type of notation is usually more desirable than comments indicating the account is in default or has been charged off due to a bankruptcy. The fact that you made the attempt to reach some sort of settlement will make a better impression with future creditors than seeing the more negative comments.

Before considering more drastic methods, take a look at the options for debt settlement. You may find that this approach allows you to get out of debt quicker than other methods and without the necessity of going through a bankruptcy.

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