Top 5 Facts About Debt Settlement

Debt Settlement is the process where people who are in debt, work with their creditors to pay only a certain percentage of the total debt owed as the final settlement amount. In many circumstances, debt settlement is in fact a real option to assist people to relieve some of the debt burden. If you are also considering this financial solution, there are some important facts you need to know.

Fact 1:

During economy crisis, many people are drowned in deep debt. Many creditors have taken their effort to collect their debts by sending out settlement offers periodically to their debtors. Some creditors require their debtors to contact them to negotiate for settlement. It has proven that creditors are actually willing to reduce certain amount of debts for their debtors.

Fact 2:

The standard percentage to settle a debt for is about 40% to 60% of the original debt amount. The actual percentage that the creditors are willing to settle for depends on how long the debts have been due, how much the creditors are willing to be paid and how high the risk is for the debtors to file for bankruptcy.

Fact 3:

When a person has decided to go for debt settlement, he or she needs to keep in mind that once the creditor agrees to accept the proposed amount, the full settlement amount is usually due very soon. If the debtor does not have the cash available, the debt settlement can't be executed and once again, the credit score will be much affected.

Fact 4:

Once the debts are paid off, it is the creditors' responsibility to give their debtors written notice and update the latest status on the debtors' credit report. Besides, the creditors have no more right to sue the debtors after the settlement process. However, there is a fact you need to accept where your credit report will show that your debts are not being paid in full.

Fact 5:

The duration needed to complete the whole settlement is about 2-4 years. As a result, don't aim to settle your debts in 1-2 months. It is impossible!

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