Debt settlement is a negotiated settlement reached with the unsecured lender of a debtors. Commonly, lenders agree to forgive at least a part of the debt: maybe around 50%, although results may vary widely. When such settlements are negotiated, the terms are normally set in writing. Usually this will be a debt settlement plan that has been agreed upon by all parties involved, but sometimes separate agreements may be made.
Often times the creditors accept less than you actually owe them. This happens when the debt settlement companies are unable to come to an agreement with your creditors. Usually, if they accept less, you still owe them money. However, it might not always be this way, as there are many things beyond money at stake. For example, if your business fails, you might have to close it; and if you don’t close it, you owe the employees and other workers their salaries, and this could mean losing your home.
It is very important to understand how debt settlement affects you. Some states have already passed laws giving debt settlement companies legal protection from harassing phone calls; however, even these laws may be overturned if you choose to sue them. In Arizona, lawsuits are only allowed if the company is somehow negligent in carrying out the settlement plan. If the company is found to be negligent, or you were put at risk due to their negligence, you can receive compensation for all of your losses.
Generally speaking, it is very easy to get a good debt settlement. To get a fifty percent reduction in your debts, you need to owe no more than eight thousand dollars. Also, you need to have a steady job and a regular source of income. If you are in this situation, there is no reason for you not to seek advice from a settlement company. These companies specialize in dealing with people who just can’t pay their monthly bills, and they know exactly what to do to help you eliminate your debts in just four years.
On the other hand, if bankruptcy is your last resort, you will probably need some financial counseling before you can eliminate half your debt. You will probably also need some legal help and some advice on how to handle your bankruptcy. Even though bankruptcy is easier to eliminate than it used to be, it is still a serious business, and you should take steps to ensure that you make a good choice. If you really think that you cannot manage to pay your way through your debt management plan on your own, then you should definitely consult with a debt settlement company to help you through the process. Most people who file for bankruptcy protection end up hiring professionals to help them out.
You will also have to pay for their services, but you shouldn’t worry about that as much as you did when you were working on paying only a percentage of your debts. Some of the debt settlement companies will charge you a fee of around 10% of the amount of money that they save you. The rest of the fee is going to be used to cover their overhead and other costs, so in the end, you are actually paying the company to negotiate with your creditors for you. They are already experienced in these negotiations, and they don’t even charge you for that part. It is much more efficient and effective to use a Gilbert debt relief professional instead.