Will a debt settlement arrangement write off work for you?
For some people, debt problems can get so out of hand that they find it impossible to pay the full amounts that they owe. While some people lose hope and declare bankruptcy, others are more fortunate and are able to secure debt settlement arrangement write off with their creditors.
Debt settlement is the term used for special agreements between creditors and debtors where the debt can be paid at a reduced amount with a one-off lump sum. In most cases, the debt can be reduced by around 50% but there are instances when creditors shave off as much as 60% of the amount owed. While this may seem too good for the debtor and too unfair to the creditor, it’s actually a more rational deal than having the debtor not pay at all and declare bankruptcy.
You might be wondering why more people aren’t taking advantage of this agreement type which is perfectly legal across the United States. One of the biggest reasons is the notion that it would hurt the credit score of the debtor in a big way to opt for debt settlement. But does it really work like that? If your credit score is already low, then hurting your credit score may be irrelevant. You need to settle your debt first so you can focus on your financial future.
This is how debt relief options such as debt settlement can help. Debt settlement arrangements are a way for borrowers to settle their debt for a mere fraction of the original amount owed. The amount for settlement varies but it is usually, at the very least, 40% to 60%. A debt settlement company negotiates with creditors on the borrower’s behalf by offering a lump sum amount to be paid within a certain period of time. This amount is significantly lower than the actual debt.
When you enroll in a debt settlement arrangement program, your credit score may take a hit, but chances are it’s already there. The reason for this is the lender may label your account as settled and not paid in full. Technically, this means the borrower did not fulfill payment for the full amount owed, and entering a debt settlement agreement write off, paid only a fraction of the debt. Still, this is a better option than going into bankruptcy.
How is a debt settlement arrangement write off better than bankruptcy? Well, when a person declares that he is bankrupt, he is in fact passing on the bulk of his assets to a court-appointed trustee, who will then divide the value to creditors.
This is why debt settlement is a real and viable option. It’ll be easier to rebuild after the initial debt settlement arrangement write off than after bankruptcy.
Debt Relief programs eliminate your debt in the best possible way. At CreditAssociates we have a special team of experts to help you break the debt cycle and provide you the tools and knowledge to secure your financial future.