When you’re in debt up to your eyeballs, you might wish your creditors would settle for less than what you owe. It’s like having your cake and eating it too. Although, having been in debt myself, I realize that when you’re in that deep, it’s more of a feeling of desperation than trying to get something for nothing. It’s like weight loss—you want to get rid of your excess debt in the fastest way possible, and debt settlement seems to be the answer.
Here’s how it works: A debt settlement company will negotiate with your creditors on your behalf to get your debt reduced to a much more manageable amount, then you make a monthly payment to the debt settlement company, which they pay to your creditors to pay off the remaining amount of your debt. It’s almost like hiring a lawyer to get you out of a speeding ticket. In fact, the debt settlement company will advise you to stop talking to your creditors and collectors. You are paying them a fee to convince your creditors to accept only a portion of the debt you owe, and if you say the wrong thing to a creditor, it might make it harder for them to negotiate for you.
To convince your creditors to accept less than you owe, they will tell them that getting at least a portion of what you owe would be better than getting nothing at all. And let’s face it—if you are at the point of hiring a debt settlement company, you may be on the verge of bankruptcy, and if you do that, your creditors may not get any money at all. It’s similar to why a bank will accept a short sale to avoid foreclosure when someone’s mortgage debt is no longer manageable.
There are some things you need to realize before you choose debt settlement as an option:
If you feel like your debt is out of control, consider other options before you choose debt settlement. In fact, it’s a good idea to check with a consumer debt relief company to explore those other options before you decide.