Debt Settlement is the fastest, most efficient way to eliminate debt - but it's not for everyone.   The key to understanding if Debt Settlement is right for you, is in understanding what Debt Settlement is, and what it is not.

What Is Debt Settlement:  Debt Settlement is a way to eliminate unsecured debt completely by negotiating directly with creditors to settle debt for less than the principal amount owed.  Unlike Credit Counseling (CCCS), Debt Settlement actually tackles the principal balances owed and effectively eliminates future interest, late charges and other "trick and trap" fees charged by credit card companies.  It is a hardship based program, meaning that there must be some financial reason that you cannot continue to make your minimum payments as they exsist today.

Goals of Debt Settlement:  Debt Settlement has three goals:

1. To lower the monthly payment into one affordable payment.  This creates cash flow for the client.
2. To settle the debt for about 50% of what is currently owed.  As an example, if you have $30,000 in credit card debt, debt settlement will settle your debt for about $15,000 paid to creditors.   This is an aggregate total and will depend on the creditors that you have.  Some creditors will settle for 20% of the existing balance, some will settle for 65% - 70% of the existing balance.  On average the total amount repaid to creditors will be about 50% of the total debt.
3. To have the client completely debt free within about 36 months.  The program length will vary based on the amount of debt.  Typical programs will run from 24 - 48 months.  48 months will be the maximum program length.

Benefits of Debt Settlement:  The two major benefits of Debt Settlement are Time and Money.

1. Time:  Because Debt Settlement (aka Debt Negotiating) cuts the actual principal owed, Debt Settlement will have you out of debt sooner than any other method.  The typical Debt Settlement program is 36 months (just three short years) compared to 7 - 9 years with Credit Counseling and 17 - 20 years by making minimum payments.   At the end of the day, time is money.
2. Money:  Debt Settlement effectivly eliminates future interest payments. Interest savings combined with principal reduction, are a powerful combination.   
3. Finally,  Debt Negotiation is an excellent alternative to Bankruptcy.  There are no public records and no one knows that you used the service (unless of course you share it)

Cons of Debt Settlement:

1. A client needs to live without credit cards for the duration of the program.  It is possible to keep out credit cards that have balances below a certain benchmark ($350 - $500).  Todays world allows for debit cards to be used when a credit card is needed. 
2. While you are in the program your credit is impaired.  That said, by the time you graduate from the program your debt to income ratio will be lower because all your unsecured debt is Settled, Paid in Full.  A good company will hook you up with a reputable Credit Repair company who will help clean up inaccuracies on the report after you graduate from the program. 

Overall Debt Settlement is an excellent solution for people in a financial hardship.  It is not a program for people who just don't want to pay their debt anymore.  

I am Kate Bourland. I help my clients get out of debt, get loan modifications and establish a debt free lifestyle. We Guarantee our Loan Modifications. You can reach me at 530-419-3967.

http://www.katebourland.com

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