Is a Debt Settlement Program Worth the Legal fees You Will Pay?

Debt settlement is one of many different debt relief solutions which can assist people who are undergoing serious financial distress financially. For most people, debt settlement means contacting their creditors and negotiating a lower payoff for the outstanding debt they have accrued. A debt settlement professional works by contacting your creditors and negotiating a lower payoff for the outstanding debt that you currently have. This will in turn reduce the amount of money you owe. In some cases this might be close to half of what you owe, and in other cases it may be more like a third of what you owe.

Debt settlement can be helpful for many different reasons. The biggest reason to try debt settlement is that it can avoid bankruptcy altogether. If a creditor agrees to settle the debt you owe them, they are agreeing to accept less than the full amount owed. This gives you, the consumer, the ability to pay the debt off quickly and easily while avoiding bankruptcy. Once you have finished making the payments and your creditor has accepted the terms you have set forth, you will simply need to notify them that you have cleared your debt and request that they transfer the balance due from your account to another account.

Another reason to use a debt settlement program is that you will be able to pay back the outstanding amounts owed much faster than if you were to handle these debts through other relief methods. The problem with debt settlement programs is that it takes time for the creditor to agree to settle the debt. Most often they will require a deposit into an escrow account, which needs to be paid at a pre-determined amount before any negotiations can take place. As well, during the negotiations the creditor may add interest onto the principle amount you owe, which means you will end up paying even more money overall once the negotiations are over. With settlement, on the other hand, the creditor can settle the debt in full for much less money than what you would pay by continuing to make payments in full.

Finally, debt settlement companies are able to settle your debts for less money than what you would owe to a private company or individual lender. If you have debts that total at least five hundred dollars and you are trying to settle them with your creditor through a debt settlement program, you are probably best served by using a company to negotiate your debts. Private companies have very little experience negotiating debt, and even if they do have experience they usually don’t have as much power as a debt settlement agency. A private lender may agree to settle for a fraction of your debt, but they won’t be able to recoup their losses from you as quickly as a debt settlement agency. Also, a private creditor will likely charge a higher rate of interest.

As you can see, using an agency to settle your unsecured debt can be a better option than making monthly payments to your creditor. The primary drawback to using an agency is that it may not be as successful as you would like. However, it is still better than filing for bankruptcy, which will result in the immediate loss of any collateral your creditors may have used to secure the loan. Bankruptcy can prevent you from obtaining any kind of credit for years to come, so it’s really worth considering the alternative if at all possible.

Of course, if your debts are extremely large and you cannot settle them yourself, you may need to use an attorney to help you settle them for less money than you would owe to your creditor. This is usually recommended if you have more than ten thousand dollars in debt, because an attorney will be able to negotiate your debt with your creditor on your behalf in order to obtain the largest reduction in debt possible. Again, it is recommended that you hire an attorney if you owe more than seven thousand dollars in debt. This is because an attorney can represent you in court and make sure that you get as many benefits from settling as possible.