In the process of debt settlement a third party or you yourself negotiate with your creditors to reduce the debt amount. Debt Settlement agencies work with your creditors to reduce your debt balance, sometimes by as much as 30%-60%.
These are 9 Easy Steps to Debt Settlement in a chronological manner:
Step 1Your first duty is to determine whether debt settlement is the right solution for you. On approaching a debt settlement firm the consultant will analyze your present financial standing and render you with free counseling.
He will suggest you with a settlement program and if you agree you will need to fill up some basic forms.
Step 2On receiving the basic information from you the Debt Settlement Company immediately contact your creditors. This is to inform them that they are working on your behalf and the creditor is expected to redirect all further communications to the Debt Settlement Company. In all probability you can now avoid the harassing calls from the creditors.
All accounts for those cards in dispute are closed. You are requested to avoid using those credit cards while on the program.
Step 3If you still receive any calls, keep a record and inform the Debt Settlement Company through phone or by fax.
The Debt Settlement Company then contacts these creditors and reconfirm that they should not be communicating with you.
Step 4The Debt Settlement Company negotiates with you to fix the amount for the monthly payment. The amount depends on your present financial position. Your payment amount for the Debt Settlement Company needs to be saved every month and are solely to be used for the debt settlement program.
Deposit the fund in a separate account while the settlement program is on, which will be used by the Debt Settlement Company.
Step 5After the monthly payment is finalized the Debt Settlement Company starts negotiations with all your creditors. Negotiation is done keeping in mind your benefit. The firms try to obtain the most lucrative and affordable settlement for you. Usually, most settlements range between 30 - 60% of the total debt amount. Debt Settlement Company stay in contact with you to ensure funds are available before a settlement is reached.
All settlements are based on the amount and type of debt you owe and the amount of funds you have.
Step 6The deal is finalized only after a copy of the settlement letter is sent to you for approval. If you agree with the settlement and the terms, the Debt Settlement Company completes the agreement with the creditor.
The monthly payment starts henceforth to eliminate the account at the revised amount.
Step 7You need to be paying off your credit cards one at a time, which ensures that you get steady results. A complete updated feedback on the current settlement situation is given by the Debt Settlement Company to all the creditors while the payment process is on. Once a creditor is eliminated, you are expected to pay the fees to the Debt Settlement Company. The settlement process is then shifted to the next creditor and the process continues until all your debts are cleared.
A client with average debt can complete a debt settlement program in 36 months or even less.
Step 8The Debt Settlement Company has professionally experienced staff to assist you for any query you have during the program. Negotiations for all your accounts are done individually.
Debt Settlement Company do not make bulk settlements like many other companies and so are able to get better results by giving you individual attention.
Step 9On the completion of the debt settlement program successfully creditors report to the bureaus that your account was settled and that there is now a zero balance remaining with them. Now you will receive a written document from them stating your debt for the particular account is cleared and that no further money is owed.
Your account is expected to have a decent status now.