California Debt Help - Why do Creditors Settle?

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California Debt Help - Why Do Creditors Settle?

shaking handsIf you are legitimately struggling and/or do not foresee being able to pay your debt in the near future, creditors would generally much rather settle than risk getting nothing or risk that you file bankruptcy. It is common practice for credit card companies to sell delinquent accounts to collection agencies, often for just a few cents on the dollar. A settlement tends to make economic sense to creditors. Debt settlement helpsDebt them recover a portion of money that they otherwise may not have. Also, most people who have been struggling for years have already paid their creditors back more than what they borrowed in just fees and interest.

Consider this scenario while keeping in mind that you have probably already paid back what you owe your creditors because of all the interest.

Let’s say you loaned your neighbor 400 dollars a year ago. In this example, your neighbor has never re-paid you anything. Imagine you knew your neighbor lost their job. Then you saw a moving truck outside of their house. That day, your neighbor comes to you offering you $200 because they simply could not afford to pay the full $400, would YOU settle?

Collectors may try to tell you that they do not settle with negotiation companies or even attorneys. That is simply untrue. They often use many unscrupulous practices to try to collect as much as they can from you. Individual collectors are often paid a commission on what they collect from you. Your debt consultant can provide you with recent examples of settlements from creditors that you owe. Keep in mind, settlements vary case by case.

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I am Kate Bourland. I help people like you get out of debt. Debt Settlement, Mortgage Acceleration, and practical suggestions for eliminating debt. Call for a Free Debt Evaluation.

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Comments (6)

Adam Brett
The Adam and Eric Group - Fullerton, CA
The Adam and Eric Group, Fullerton's Finest

Very true.  Most creditors have also bought the debt for pennies on the dollar - so make them an offer.

Jan 23, 2011 10:35 AM
Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT

Kate, It seems to be a vicious cycle, against the consumer.  I cannot believe that the Congress hasn't created regulations to stop the banks from taking advantage of people.  They claimed that they made changes, but, they were not changes that make enough of a difference to the consumer who is struggling with these payments.

Jan 23, 2011 10:43 AM
Tim Peterson
Wisconsin Realtor Safety and Concealed Carry Classes - Madison, WI
Realtor Safety Training Classes

Great concept-sounds like you have it more formalized than here in Wisconsin

Jan 23, 2011 01:52 PM
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Adam, most creditors have syndicated the debt so that they are making money both ways.  

Frances, unfortunately, the banks own congress.    They have a strong lobby group and until we as consumers stand up and say stop, we can only do the best we can.

Tim, Wisconsin is not a very consumer friendly state.  It's unfortunate.

Jan 23, 2011 04:48 PM
Jim Patton
Aspire Home Real Estate 209-404-0816 - Modesto, CA
Realtor - Stanislaus ,Merced, San Joaquin Counties

Good information Kate.  I'm sure most people have no idea they can negotiate.

Jan 23, 2011 05:20 PM
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Jim the creditors will tell you that they don't but they do!!

Jan 23, 2011 05:27 PM