How does debt consolidation Work? Debt Settlement whenever you're in a position where you have debts that are no longer a value to you,
for example a credit card that's maxed out you're unable to pay or there may be other kinds of debts in that same category where you need to resolve them settling the debt is one possible approach to that
Debt Settlement is essentially where you get the lender to agree to accept an amount that is less than the total amount of the debt in order to resolve the issue and that can be either a lump sum payment or a series off payments over time but,
The best settlements are usually lump sum payments that
take care of the entire obligation now something you also need to remember when it comes to debts and particularly in this situation is that you may be getting phone calls and letters and threats of lawsuits and a number of other things.
You also have rights when it comes to settling debt and debt collection in general that are guaranteed by federal law as well as whatever state you live in in most cases
so be aware that there are rights that you have you'll notice when you actually get into the settlement process that depending on the lender there is a wide range of what they're willing to accept many credit card companies will be willing to accept as little as twenty to thirty percent and in some cases even less than that to settle,
The full amount a HELOC a home equity line or a second mortgage on your home may accept a few thousand dollars to settle the entire debt as part of the short sale on the other hand an auto lender will probably be very hesitant to accept anything less than five ten maybe fifteen percent discount on their debt credit unions are,
also very hesitant to accept much of a discount when it comes to settling debt so depending on the type of lender you will see a wide range but in most cases it is possible to settle the debt for less than the full episode in order to resolve the situation,
Now something to keep in mind whenever you're involved in a debt settlement process wherever you keep your money whichever banking institution that's in should not be the same institution that you're trying to settle that with because you're running the risk of them being able to access your funds or see that you have money and,
That will compromise your ability to be effective in settling the debt you should also be aware that in most cases it's better to use someone as a representative when you're settling the dead than to try and do it yourself directly,
That means usually there you're going to retain a law firm to try and attempt to resolve the issue for you instead of you doing it yourself if you do it yourself you can in some cases be successful but,
Most of the time the creditor will not take you seriously nor will you be able to get as good a discount as if you use a law firm or other debt settlement agency,
Keep in mind too that you have other options besides just debt settlement there may be other solutions that you should explore with your legal advisor bankruptcy,
For example maybe one that makes sense or a short sale or some other approach so that settlement is one of several options that you should consider that's how the process works in general.
Those are the things to be aware of in general and I hope that's been helpful.
