Seeking Debt Relief Through
A Debt Reduction Settlement
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A Debt Reduction Settlement is a process used by both debtors and creditors to settle a debt for less than what is owed. If negotiated properly on behalf of the debtor it can quickly and dramatically reduce the debtor's debt. Settlements range from 30% to 70% of the current debt, with the typical debt settled for 45 cents on the dollar. After paying Agency fees, a typical client realizes a savings of around 20% to 40% of their original debt placed in the program.
Debt Reduction Settlements are typically offered through third party debt negotiators, or attorneys as noted above. As this is an emerging industry, there are few true professionals providing these services. While more and more agencies are evolving, it is important to deal with one that is highly skilled in the art of debt negotiation, knowledgeable in debt collection, and who has in-house legal counsel, in order to obtain the most favorable settlement.
There are numerous factors to consider when negotiating a debt settlement. Some of these factors include, the type of debt, who the creditor is, the amount of debt, how old is the debt, the debtor's ability to pay the debt as agreed, the debtor's assets and liabilities, and so on.
Also of paramount importance is the debtor's ability to raise funds to settle their debts. You should be aware, however, that there are numerous methods used to raise these funds. The most important thing to understand here, is that debtors electing to resolve their hardship through a Debt Reduction Settlement do NOT need to have up-front cash to enroll in a program. Typically, funds used to settle debts are saved over a period of time—usually a 3 year period.
Enrolled in a Debt Settlement Program, clients open a trust fund or savings account, in their own name, and then make deposits into the account on a regular basis. To accomplish this debtors elect to stop making payments on their unsecured accounts, opting to place whatever funds that are available into the account. When enough money is saved, a debt reduction settlement is negotiated for one of the accounts. The strategy is to first settle the account which is most troublesome and which may provide the greatest savings. The process continues in this fashion until all debts have been settled in full.
What is of utmost importance in seeking a Debt Reduction Settlement is working through a highly experienced Debt Negotiation Agency that will not only negotiate the best settlement, but will also deal with your creditors effectively throughout the process. We cannot overstate the importance of this. Today, there are many companies claiming to be debt negotiators, but most have little experience, are ineffective in negotiating truly favorable settlements, and fail miserably in handling creditors and serving the needs of their clients. As a result, sadly these agencies are tarnishing the Debt Settlement industry.
The fact is, debt negotiation is a specialized field that requires many years of knowledge and expertise in order to negotiate the most favorable settlement and to manage the day to day operation of handling creditors and clients. An agency must be well staffed with professionals knowledable in all areas of debt negotiation, debt management, banking, creditor and collection law, federal and state regulations, and must have specialized technology to handle ongoing creditor calls, to process negotiations and transactions, to handle payments, and to effectively communicate with staff members, clients and creditors.
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