Debt Settlement works by reducing the balance owed (principal)
on your unsecured personal debt accounts through the time-honored
process of creditor negotiation. This is different from simply
reducing the interest rate as with Debt
Consolidation and Credit
Counseling, which do not affect the total debt balance. By reducing
the balance itself, Debt Settlement provides a much faster means
of becoming debt-free.
Most creditors are willing to accept 50%,
40%, sometimes as low as 20% of the balance owed in order to
close out an account rather than lose the entire amount in a
bankruptcy proceeding. From a business perspective, it is a matter
of the creditor receiving something rather than nothing, as would
be the case in most bankruptcies. Of course, different creditors
have different policies, but as a rule, discounts of 50% or greater
are routine in the industry. As a consequence of this approach,
money that was previously wasted on endless minimum
payments (most of which went toward interest charges) goes toward reducing
the actual debt balance.
This is why Debt
Settlement through debt negotiation is
the fastest debt
elimination method short of Chapter
7 bankruptcy. |
