Many consumers today are finding themselves in financial stress and looking for help.
A popular choice among many people is debt settlement.
This involves the negotiation with creditors in order to pay off only a percentage of a total debt and an agreed upon amount for the settlement.
Most times, people choose to use these type of services rather than trying to attempt it themselves.
A debt settlement company typically tries different negotiation strategies to settle your debt and eliminate anywhere between 40 and 60% of you outstanding balances.
The debt settlement process is very simple.
The company completing the settlement requires the consumer to stop making payments to all creditors and pay a specified amount of money each month into a designated savings account that is set up with the company.
Once enough money is saved, it will be sent to pay off a creditor.
After one account is paid off, the next one is paid until they are all paid off in full.
Creditors are beginning to see that one third of the 1.
5 million bankruptcies of last year were on debt that was mostly current.
Most people are surviving by borrowing from one creditor to be able to pay another.
This system ends up in failure when credit lines are reached and people are unable to make the minimum payments each month.
If a consumer decides to file bankruptcy, it is most likely that creditors will not receive anything of the balance that the consumer owes them.
Because of this, it is better for a creditor to negotiate so that they can retrieve at least some of their money.
Most companies will work with those customers who have justifiable financial problems and really need the assistance.