Here is everything you need to know about debt settlement

A choice option for debt relief is debt settlement.  Many know this, but people don’t quite understand what exactly it is.  They can’t wrap their brains around what it does and how it can help them.  It’s a fact that the aim of debt settlement companies assists in helping you lower your amount owed by taking care of penalties and fees, that you get a lower interest rate, but it isn’t the easiest terms that you must agree to.  Even with some hurdles to cross it is a method that is the best choice because the options really do help many Americans every year. We have compiled some misunderstandings that people have when signing up with a debt settlement program.

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Creditors aren’t always quick to agree.

It’s a shock to many that not all creditors will jump on board because you can no longer pay the debts you owe them.  More times than not, on the first approach with a lender they will most likely say no. This is where debt settlement companies have better negotiating power than if you try to settle your debts on your own accord.  The company’s know how and tactics in dealing with creditors is backed by numerous years of settling debts for thousands of previous clients.

You are not entitled to credit card debt settlement.

Yes, the government does encourage many lenders to agree to settling debts for people who can no longer afford the amounts, but it isn’t a regulation by law, so your creditors do not always have to agree.  The law asks them to be open to it, but they don’t have to do it because it is demanded of them. It’s not a right. It’s a privilege. You have the right to apply but you don’t have to be accepted, by any means.  Laws that have been put in place that protect the debtor are harassment laws for debt collectors that use abuse tactics to receive repayment. These laws do not mean you are exempt from your debts, just that creditors can’t bully you into paying them.

Lenders do not favor the idea of settlement.

 With so many options for debt relief many lenders will prefer other options over settlement.  This choice is based on the capabilities of your current finances.  They will rake through all of your finances to determine what exactly they are willing to negotiate.  If they think you can pay it without settlement they may offer lower interest and keep the balance you owe.  They may also lengthen the time they are allowing you to repay the full amount, which lowers your amount you pay every month.

Tips for Debt Settlement

Don’t forget the main reason why your creditors lent you money in the first place – to make money.  The last thing they want to do is lose any on their investments. Below we have some tips for you if you are denied debt settlement from your lenders.

Record everything.  

Lenders deal with many people every day.  It is your responsibility to keep record of every conversation you have with your creditor during your debt settlement process.  Keep your corresponding letters and whatever responses you may receive. Ask for your lender to send you progress updates during the whole process and file those away, as well.

If you have a telephone conversation

Be sure to jot down the name and the title of the person you were conversing with.  Write down the date along with the time and what exactly was spoken about. It is a good idea to write everything and send it to your lender and be sure that they do the same, in return so there aren’t any disputes.

 Patience is a virtue.  

The longer the process takes, the more likely you might be able to start with settling.  Don’t forget that if they know you are able to pay the debt but are refusing to pay anyway they may sue you.  You must be sure that you cannot pay back your debts before playing this game with your lenders. As we said before, they have a lot of experience with these matters and are easy to call any bluffs.  The last thing you need is a lawsuit on top of already owing all your debt.

Be sure that you both agree to the same terms

And that the terms are put in writing.  Do not just send a check because they ask. At any point, if the agreement is not documented you are at risk of the lender changing terms without your approval.  This will create big problems in the long run. It is in our best interest to protect yourself.