Debt Settlement is defined on Wikipedia as when the “debtor” (the one who owes the debt) and the “creditor” (the one to whom the debt is owed) agree on a large single payment that is less than the total amount owed, but will be considered payment in full.
During the economic downturn of the 90’s, banks became more willing to negotiate Unsecured Debts, as consumers over all were experiencing economic hardship. Debt settlement became an industry as banks created specific divisions to negotiate debt settlement for consumer credit cards. As a result, debt settlement companies became more common.
The most common misconception about debt settlement is that creditors are easily persuaded to settle your debt for less than you owe them. If the number of debt settlement companies is any indicator, negotiating debt settlement with creditors is not an easy task. There is even more of a challenge when negotiating to reduce your debt with collection companies, who have already purchased your debt from the original creditor for a lower price. If you do decide to go with a debt settlement agency, many creditors will be less forgiving.
The most impactful result of the debt settlement process is the impact on your credit score. There are many pitfalls to trying to fix your own credit using debt settlement. Banks created special credit cards to help people rebuild their credit. There are many options that consumers can use to improve their credit score. Hire an experienced professional to help you navigate the best options for your particular case. Educated consumers understand that the interest rates on those cards is often more expensive than hiring a reliable credit repair company to help you prevail.
The Credit Group has been successfully helping people improve their credit and provide helpful guidance for good financial habits to maintain your new improved credit rating.