Bankruptcy Options: Debt Settlement: The Bad

Can Debt Settlement Help?

If you choose debt settlement as an option here is some basic information about the process works.

Debt settlement companies typically set up a special account for the consumers who use their services. Often, creditors will not consider negotiating a reduced balance on an account that is current.  Which means, that in order to take advantage of debt settlement, you may have to allow your accounts to fall past due. This of course will generate a negative impact on your overall credit rating and history.

The consumer is instructed to STOP making their credit card or bill payments and to send monthly payments to their debt settlement company account instead. Once the balance in the debt settlement account reaches a certain amount, the debt settlement company attempts to make a deal with the credit card or bill company.

The deal is this: the debt settlement company will agree to pay the credit card or bill company a lump sum in exchange for forgiveness of a portion of the debt.

Keep Reading: Bankruptcy Options – Debt Settlement – The Ugly