When it comes to avoiding bankruptcy, a debt settlement plan is your number one choice. Not only will it eliminate your debts, but you can typically achieve discounts on those debts of 50% or more. However, it should be noted that these plans are not "cure-alls" for your debt problems. Here's a quick look at how a debt settlement program works, what it can and cannot do, and who it is best suited for.
The objective of a debt settlement plan is to eliminate your debts as quickly as possible. And for as little money as possible.
When I say as little money as possible I am not just referring to the
settlement amount that you reach with your creditors. I am referring to
the overall cost of the settlement which includes this amount plus the debt settlement fees charged by the debt relief company or lawyer that you hire.
When you enter a debt settlement plan you will stop paying your creditors (if you haven't already) and then begin negotiating with them to "settle" your account. If you don't feel comfortable doing the negotiating yourself, you can always hire a professional debt settlement company to work on your behalf (this is where the fees come in). This will certainly cost you more but it will be less stressful and you might end up with a bigger discount if you go through a professional.
While the debt negotiation process is underway, you will begin to deposit money into a separate savings account each month. This is the money that you will be using when the time comes and you reach an agreement with your creditor(s). Depending on the amount of your debts, and your ability to save money to settle them, the debt settlement process typically takes between 1 and 3 years to complete.
Debt negotiation/settlement plans are for people facing financial
who are considering bankruptcy. They are not for people with decent
credit and a decent income who are currently paying their debts but
would like to discount those
debts by 50% to 70%. If you are facing financial hardship then you may
be considering bankruptcy as a debt relief option. Keep in mind that
since the bankruptcy laws changed a few years ago, it has become
much more difficult to declare chapter 7 bankruptcy (where your debts
are erased completely, save a few exceptions). Since then debt
settlement has become known as the "New
Bankruptcy" and has become a much more popular option for people who
would normally go right into a bankruptcy filing.
But for all the things that a debt settlement plan can do for you, there are many things that it cannot do for you, regardless of what some unscrupulous companies would have you believe. Here are some of the things that a debt settlement company cannot do...
Now, this isn't meant to scare you off of considering a debt settlement plan. But you should have your eyes wide open when deciding on this option to eliminate your debts. Before you do embark on a debt settlement plan, whether on your own or through a debt company or attorney, I would recommend that you do at least these two things.