Before we go for a debt settlement let us learn first its principles.This article would be a big help to those who are in debt. It will teach you the principles of debt, is it safe, how it works and many more.
If you settle a debt, you get a creditor to agree to accept less than the amount you owe as full payment. But a lot of painful things have to happen first.
If you are worried about falling behind — but haven’t yet — you won’t be able to settle. A creditor or collector is not going to accept less than you owe if there’s reason to believe you could pay the full amount that you originally agreed to.
Debt settlement comes into play only when you have many late or skipped payments and possibly collections accounts. Your credit scores will have been shredded; you feel hopelessly behind; your income isn’t enough to keep up with your debt obligations.
As you explore debt settlement, beware: Consumer finance groups warn in very strong language that it’s risky, doesn’t work for many people, and may just prolong your financial pain. It won’t stop late fees, collection notices or even threats of being sued while the process plays out.
“If you can erase your debts in a Chapter 7 bankruptcy, that’s a much better option than trying to negotiate settlements,” says NerdWallet columnist Liz Weston, author of “Your Credit Score” and “Deal With Your Debt.” “Only if Chapter 7 isn’t an option — you refuse to file for bankruptcy, or you can only qualify for a Chapter 13 repayment plan — should you consider debt settlement.”