Financial woes can be troubling for any individual. Hence, you ought to be thankful that you have finally decided to rid yourself of such pressures. You will be able to extract yourself from the strangleholds of the credit card companies at last. You will be put a new start to your financial life when you go for debt settlement. In this article, you shall be learning about how you shall be able to use debt relief plans in order to save your financial life.
Debt settlements will go to impact the way by which you lead your life a great deal. You shall have to have a thorough understanding of these programs in order to make a good decision about your financial life. The information in this article will be helping you in breaking the chains of economic slavery and let you become completely free. The reality of the situation will be that you shall be able to run your financial matters on your own. You will only have to know how credit cards work and your financial life will be in your hands.
It will not matter whether you have accumulated a lot of debts or whether you just owe a few thousand dollars in credit card debt. Debt settlement plan will help to make you lead a free life where you will not be required to be worrying about debts all the time.
A short summary of debt settlement plan
In the event that you have finally decided to not give payments to the creditors in a manner in which the creditor will like to be paid for a few years, then the creditor will be willing to sell his debt which you owe to him to the debt collection agency within 3 months since the moment when you first missed your payment. However, by this time the original creditor shall be starting to call you in an attempt to try and convince you to remain as his client. However, if they were to see that they can get nothing, then they will not hesitate to sell your debt off. Creditors will be willing to sell off your debts for two basic reasons:
- They can now get 20 cents per dollar from the collection agency.
- They can now get an additional 50 cents per dollar from the government because of tax breaks.
Thus, as a result of this, the creditor shall be getting a good 70 cents per dollar, by only selling your debt and have not even paid them anything.
For example, you must consider a situation in which there is a company to which you owe a thousand dollars in debt. In the event that you are not able to pay your debt off to them then they can sell your debts to a collecting agency for about 20 percent of the amount that you owed them, which is 200 dollars. After this, the company will be getting a lot of tax breaks also which is about 50 percent. This will make the amount come up to $ 500. As a result of all this, the company will be making $ 700 for the $ 1000 which you owed them, and you did not have to pay them anything for this it all.
Once your debt has been sold off to the collecting agency for the 20 cents per dollar, you will have to send them one “Cease and Desist” letter. And this will bind them legally to the stipulation that they will not be allowed to contact ever again. They are not going to have the rights which the creditors will be having because they are just a 3rd part agent who has purchased the debt.
Thus as a result of all this, you will be able to tell your debt collecting agency that you would intend to pay 40 cents per each dollar. This will be giving them a total profit of about 100 percent. But in exchange for all this, they can be reported to the credit bureaus about how your debts have got paid and then settled.
The debt settlement plans will only be working by just making a reduction of the balance which you owe them on your unsecured accounts of personal debts by the procedure of credit negotiating. This can be a bit different from only reducing interest rates which happen with the debt consolidation loan. In a debt consolidation loan program, all the debts that you owe will be consolidated into one single loan. You will be required to pay low interest, but that will not influence the total debt balance that you have.
Some important questions that you should ask yourself when you want to go for debt settlement:
- Do you actually suffer from a bad financial situation?
In the event that you are in a seriously bad situation financially, then you should be working out things with the creditors you have rather than be declaring bankruptcy, and you can consider using debt settlement programs as a solution for all this.
- Are you completely sure that you would like to be avoiding a bankruptcy?
Debt settlement programs will only be an alternative option to filing for bankruptcy. It will be allowing you to keep a stronger control over such processes and also to be maintaining privacy when you are working through all your financial issues. However, like other issues of our daily life, a successful debt settlement procedure will also depend on how committed you are to the program.
You should be going through a lot of good debt settlement feedback in order to see whether you would want debt settlement for yourself.
It can be a tricky business to be getting out of any financially difficult situation. But debt settlement programs are a way to help in doing this. Hopefully, the information mentioned in this article will help you.
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