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Settling The Debts– The Best Options To Avail

Your life may be in jeopardy, if you are under a heavy burden of debt. Remember, it never looks great, if you have a high amount of debt pending under your name. If you are unable to pay the debt, scenarios worsen. Dealing with the debt collectors could be even more frustrating. But, in order to enjoy a debt-free status, you need to settle the pending debts through legitimate procedures. There can be different debt settlement procedures to improve your situation. Consulting with a reliable credit counseling agency could help in improvising the situation.

Understanding Debt Settlement

Debt settlement is a procedure through which pending debts are settled for a one-time payment or fixed monthly installment scheme in order to settle the debt amount. Say, in simple words, debt settlement provides the debtor an option to negotiate, with the collection agencies or creditors to reduce the amount being owed to improve your financial condition and make you get out from the debts. However, you must consider the part that settling the debt for a lesser amount than what you owe never improves your credit score.

How Does the Process Work?

According to notable debt settlement reviews, there are primarily two ways through which you can settle the debts. Either you can work with the original creditor or you may approach a collections agency.

As per the credit collection agency scenario, If you are unable to make the repayment for over 4 months, your pending debts will be sold to the collections agency. During such scenarios, the actual creditor only receives a certain percentage from the total pending debt amount. During such scenarios, you will be directly dealing with the collections agency regarding debt settlement.

If your debt continues to be owned by the actual creditor and there is no involvement of any collections agency, the entire procedure to be followed will be different than the one explained in the above para.

Negotiating with the Actual/Original Creditor

When dealing with the actual creditor, you need to play your cards correctly to convince them about your situation and make the settlement for minimal amount. However, the process never starts before 90 days of non-payment of bills. Such a scenario is harmful for your credit score. It can act as a negative influence in future when you try to approach for some loan sanction.

You must keep in mind that you technically owe the entirety of your pending amount. However, because of certain circumstances where you are unable to repay the pending amount, the creditor associated with it would like to collect the minimum percentage of the total amount to reduce their losses. Remember, a debtor who opts for settlement is always better than the one who defaults the entire amount. Announcing bankruptcy condition creates a negative impact on your social status, too. Negotiating is always a better option to settle for lesser repayment amount of your existing debt.

This was posted in Bdaily's Members' News section by David Wicks .