California Debt Help - Why Do Creditors Settle?
If 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 helps 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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