Buried in Debt? Debt Settlements Bring Hope
Debt settlements, otherwise termed as debt negotiations or debt arbitrations, are methods toward reduction in debt in which a negotiation between the debtor and the creditor leads to an agreement of a reduction of there amount outstanding that is treated as a full payment.
The concept of debt settlement has been in practice for many years. However, the term “debt forgiveness” came into existence in the financial industry more than 30 years ago with an aim to bring about business debt settlements with literally bankrupt or financially challenged businesses. However, in America the concept of debt settlement was introduced in the late 1980s and early 1990s with the augmentation of bank deregulation and the subsequent economic recession that consequently caused financial hardship for consumers.
The effective debt reduction strategy in debt settlement caters to a consumer market that has reached a $2.44 trillion in U.S. consumer debts, apart from mortgage debt. The very concept of debt settlement is followed with the sole aim to satisfy both the debtor as well as the creditor, which ultimately relieves a debtor from his/her debt and makes it possible for creditors to recover their money. A debt settlement letter to this effect is the appropriate tool for such transaction. Creditors are amiable to legitimate debt settlement cases considering inherent risks, such as the debtor declaring bankruptcy, debts pending declaration as a charge-off (debts written-off by banks), or having to endure ineffective or highly expensive collection efforts. Opposite these risks, its more prudent to reach a successful settlement, where a certain percentage of the entire account balance is forgiven by the creditor.
Debt settlements primarily include negotiation of credit card debt but the procedure seems effective even on a wide range of unsecured accounts together with medical and business debts.
The role of a debt settlement letter can never be overlooked. A debt settlement letter is the key to a proper and faster debt settlement. It is the very first step that a debtor needs to take to get relief from his debt. Thus, the debt settlement letter is a very necessary contract between a debtor and a creditor. If the creditor agrees on a specified debt reduction, this tool will serve as proof that the debtor remitted “payment in full” in satisfying the debt.
Even today, many consumers are not aware of the risks related to having unpaid debts. Defaulting on financial obligations could certainly lead to a variety of unfavorable circumstances. In the worse case scenario, it may force you into legal actions that could allow a creditor to seize your wages or property. But, such risks can be greatly mitigated by taking immediate and proper action through the negotiation of debt settlements.
John Williams has been associated with the Debt Free League for the past few years and he has authored a number of articles on debt settlement, debt relief loans, debt consolidation loans. Contact to get your free Credit Report Evaluation now.
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