Wednesday, 14 July 2010 03:00Many consumers across America are struggling to pay their bills. They may be deep in credit card debt, behind on medical bills, have other debts they simply can't pay, or even a combination of the three. If this is thecase, they may have heard about a debt settlement program on the TV or radio and wondered if it can help them.
The offer to get out of debt by paying pennies on the dollar might sound too good to be true, but in many cases it is not. Debt settlement is a safe, legal way for consumers to get out of debt quickly, particularly when working with a successful provider of services.
The benefits of debt settlement are straightforward: settlement companies can reduce debt by approximately 50 percent because professional negotiators work on behalf of consumers to negotiate with their lenders. The strategy typically reduces a consumers monthly payment substantially, and programs generally do not last longer than three to four years, so there is light at the end of the tunnel.
The reason debt settlement works is that when creditors are faced with the option of getting very little or even nothing from a consumer that is deeply in debt, many lenders would rather accept a percentage of what they are owed as a recovery mechanism. Because these settlements are being negotiated by professionals, the debt settlement Company can optimize a settlement strategy over the entire portfolio of a clients creditors and determine the ideal timing and offers for settlements.
While debt settlement can damage a consumer's credit score, particularly in the short-term, if the program helps a consumer avoid bankruptcy, that consumer may be much better off in the long term. In addition, after settlements are made, a consumers credit report is updated to indicate that the account has been resolved. Many consumers that enroll in a good debt settlement program have their first debt settled within a year, and the remaining debts are settled thereafter, over the life of the program.
The problem many consumers face when they finally decide to seek the help of debt settlement experts is that they are already deeply in debt, and need a powerful solution quickly. The key for the consumer is to make sure they do their homework and find a Company to work with that has a successful track record.
A good debt settlement plan, in addition to resolving a clients debts, will also provide insight about how a client can avoid ever getting into the same difficult financial position. The key is for the consumer to become debt free and then remain so.