Debt Settlement OffersWritten by Jill Morrison
Debt settlement offers a quick and valuable method for eliminating large amounts of debt. It is an aggressive process and should only be used in serious cases of debt. Debt settlement begins by consolidating all debts into one total debt amount. Then, debt settlement companies will negotiate for a reduced amount with creditors and financial institutions. Once an agreement is made, debts can be paid off easily because they have been dramatically reduced.
Learning about Debt Settlements
Debt settlement is commonly used for debt accumulated by credit cards, medical bills, and unsecured loans. Secured debts, such as auto loans, student loans, alimony, child care, or government loans are not addressed by debt settlement companies. Debt settlement is typically only used for extreme cases of debt. Some companies may require that clients are at least $2,500 in debt before using their services.
Debt settlement companies can negotiate for debt reductions of up to 60 percent. Many can see why debt settlements are preferred over debt consolidation loans. While these loans will help to consolidate debts and reduce fees and interest charges, they do not reduce total debt amounts. Debt settlements allow people to pay off their debts much faster than debt consolidation loans.
Debt settlement can help people to save their credit ratings. With lowered debt totals and payments, credit scores will not deteriorate, although person's rating will initially take a hit when accounts are closed by the settlement company. Settling debts once and for all is the best move to make by those who want to improve their credit ratings. When the settlement has been completed and all debts are paid off, it is up to the individual to create better budget plans so as not to slide back into debt. The better companies are the ones that provide educational resources as well as options to begin using credit again in a safe way.