Debt Settlement Tools
Your Independent Guide To A Debt Free You

Debt settlement is one of the best debt solution that have come to stay.

The major aim of this article is to provide you with debt settlement tools you can use to negotiate your debt with your creditor (s) by yourself or with a debt settlement company so as to become debt free.

With a properly organised debt settlement process, debt settlement remains one of the best solutions avalable to debtors

In this article on debt settlement we will be looking at:

What is debt settlement?

The debt settlement process

How debt settlement works.

Pros and cons of debt settlement

Why not take your time to read through to get an indebt understanding of the settlement process, Understanding the debt settlement process is a major key to solving your debt.

What is debt settlement?

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The debt settlement process

The settlement process always has a very similar trend. It starts with the start-up stage and ends with the debt free stage. Let us see the process.

The start up stage ; this stage includes when you are unable to continue with your debt payment, you stop paying your debt to your creditors, you contact a debt settlement company, or decides to settle your debt by yourself and you start paying into a trust account set up by your settlement company- this is if you are using one. When you make this payment, part of the payment goes towards your settlement fees and the other part will go towards paying off your creditors once negotiation is reached.

The dark waiting period; once you stop making payment to your creditor, there is going to be adverse effect on your credit history. At this time your credit score will start to drop and creditors will start contacting you with regard to their debt. The reason why creditors will start calling you during this period is coupled with the fact that most debt are written off once they are over 180 days late. To avoid this creditor will call you to collect their debts. At a point the creditor may sell the debt to a collection agency for a fraction of the total debt.

Negotiation stage; this is one of the most crucial stage in debt settlement process. This is the stage you (if you are doing it yourself) or your debt settlement company contact your creditors or collection agency and negotiation for debt settlement. If you contact them at this time there are great possibility that they will agree for negotiation and settlement.

Debt free stage: this is when you have made a complete payment through your debt negotiation and settlement and you are now debt free.

Let us take a look at how the debt settlement works. Back to Top

How debt settlement works

• The debt settlement company has successfully negotiated, settled or reduced at least one of the debts you owe.
• There is a written settlement agreement between you and your creditor.

Pros and cons of debt settlement

The pros and cons of debt settlement which is also the advantages and disadvantages of debt settlement is very important to consider before making a decision on whether to apply for or carry out a debt settlement program or not.

Having look at what debt settlement is, the debt settlement process and how debt settlement work it is now a good point to look at the pros and cons of debt settlement.

Pros or Advantages of debt settlement

• Debt free: one of the greatest advantages of the settlement process is that it can make you debt free if utilised properly. It is one of the best debt solutions that can easily make a debtor free from debt.

• One single payment: with a settlement process you only have to make one single payment for your debt. Unlike other debt solution where you have to make multiple payments, in debt settlement you only make one and only payment as a complete payment for the debt own.

• Extra charges Elimination: with a settlement process you don’t have to pay any type of extra charges to your creditors or collection agency.

• Reduced payment: with a settlement process you pay an amount lesser than your original debt as a full payment. It’s a process that can drastically reduce your total debt.

• Avoid legal action against you: with a settlement process you can easily reduce legal actions against you. Once your settlement terms have been agreed on there will be no reason to file a suit against you. Once you have been able to make your agreed payment then you will be totally free.

Cons or disadvantages of debt settlement

• Poor credit score: one of the greatest disadvantages of debt settlement process is that it can make you have a poor credit score. This arises as a result of you not been able to meet up with your payment to your creditors. Once this is reported against you it will cause your score to drop and the effect is a poor or bad credit rating.

• Payment to debt companies or agency: if you decide to make use of debt settlement companies or agency, you have to make monthly payment to them in form of their charges and for a lump sum payment to your creditors. For someone with no access to finance it’s difficult to raise these monies. You can eliminate the settlement companies charges if you decides to do it yourself. For more on this read do it yourself debt settlement

• Credit report status: earlier one we said that if you miss your payment it will result on you having a poor or bad credit record. It is also important for you to know your report status. If you don’t carry out a proper negotiation with your creditor your final report status will reflect or be updated as Settled. This may create a negative impact on your ability to secure future credit as against if it reflects Paid in full status.

• Tax payment: there is a type of tax called The Cancellation Of Debt (COD) Income. This is the tax you paid that is based on the percentage of debt forgiven. Its true that you pay tax on the debt forgiven for more on this read tax debt settlement

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Debt settlement program remains one of the best debt solutions that can easily make you debt free. But you must understand the process and make use of a reliable debt settlement company.

Remember that this article is for information purpose only. For any information based on your situation please consult a registered debt firm.

If you have credit card debt and you are thinking of credit card debt settlement , see how you can do it yourself credit card debt settlement! Click Here!

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