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Does debt settlement provide a quick fix to your debt woes?

Are you someone who owes an overwhelmingly large amount of debt on your credit cards? If answered yes, you need not fret or feel intimidated as there are ways in which you can tackle your debts by settling them either on your own or through a professional company. For all the people who are struggling in debt, there are various debt relief options through which you can repay your debt and get back a firm grip on your finances. Through debt settlement it is possible to waive off a portion of your outstanding balance and reduce the total amount that you owe. Debt settlement can be either done on your own or through a legal company and while it is certainly better to get help from a company, it is not that you can’t get out of debt on your own. Read on the concerns of this article to know more on settling your debts and getting out of debt.

Debt settlement programs – How do they work?

If you’re a novice who is spending sleepless nights wondering about the soaring personal debt level, you must also be eager to know how debt settlement actually works. Well, when you approach a debt settlement company, the representative will take a look at your finances, will check the total amount of debt that you owe, the total principal balance and the total amount that you’re paying as the interest rates. He will then try to negotiate with your multiple creditors and convince them about waiving off a portion of their debts so that you can easily repay the remaining amount. If the creditors see that you’re going through some serious financial hardship due to which you can’t make payments on time, they will agree to reduce the amount and make it feasible for you to repay and become debt free. Then the representative will sit with you to check your monthly payment affordability so that he knows the amount that you can pay each month. If you’re in a condition to repay the entire remaining amount in a lump sum, he will accept that or else he may set up an alternative monthly.

Obtaining a settlement on your own – Steps to take payment plan.

If you don’t want to seek help of the professional companies, you can also seek debt settlement on your own. Here are some steps that you can take.

  • Relate your financial situation: The foremost step that you need to take is to relate your financial situation to the creditor so that they may know the actual reason behind the default on your monthly credit card payments. Give them a proof of the fact that you’ve not been able to make payments on your cards and this is why you wish to settle your debts.
  • Write them a letter: This is called a financial hardship letter or rather a debt negotiation letter to be more precise. In order to make the request pretty formal, you should politely write a letter mentioning the total amount that you owe, the amount that you will be able to pay after a settlement and the reason for your hardship. Don’t be rude and don’t adopt to false tactics to make them agree to your proposal.
  • Start making payments as soon as they agree: When they agree to make reductions on the total unpaid credit card balance, you should immediately start making the payments to avoid any further fuss. You can either repay the remaining amount in a lump sum or pay them in easy and affordable monthly payments.

So, when it comes to repaying your debts, you can take help of the debt settlement firms or take steps to repay them on your own. As debt settlement hurts your credit score, you should also take credit repair steps to boost your score and get back on track.

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