What is Debt Settlement?

Debt settlement is the process by which consumers eliminate their debt for less than the full balance owed. This process can serviced via a debt relief program or consumers can opt to do it on their own. Settlements typically occur after a consumer has defaulted on payments and has experienced financial hardship. Settlements are only typically eligible for accounts that are late or have gone delinquent.

Benefits of Using a Debt Settlement Company

The perks of using a debt settlement company are that they are essentially handling everything for you, and you won't have to carry the stress of negotiating your accounts and worrying about payments, etc. Knowing that you have an advocate on your side should feel like a weight off your shoulders. Any “good company” will make sure that the process is “less stressful”, for you, the consumer.

You'll want to make sure that the company you work with does not charge upfront fees! If a settlement company or law firm is charging you upfront fees, they are not incentivized to save you as much money as possible. They will get paid regardless if your program succeeds or fails. This is like paying a plumber before they even open up their toolset and fix one leak, something you want to avoid doing.

DIY Debt Settlement

You really need to make sure you are saving money every month in order to satisfy the accounts you want to settle. Otherwise, this can lead to more trouble down the road. This is especially true if the debt settlement process is not something you have experience with. You also want to make sure you have some savings accrued so that when you do negotiate a settlement and new repayment terms, you have money to take advantage of the deal offered. If you do not have the discipline to do this, a DIY option may not be your best bet. Otherwise check our top tips to negotiate credit card debt