Settling Debts: Easy Way

Debt settlement occurs when a creditor agrees to settle for a dollar amount that is lower than the actual amount owed. It is the process of contacting creditors directly or through a third party and negotiating for a lump sum payoff of your debts is known as debt settlement.

Benefits of debt settlement:

• One’s principal debt amount can be reduced to approximately 40 – 60%.

• Not only it reduces one’s APR (Annual Percentage Rate - The true rate of interest you are paying on a finance agreement.) but also eliminate late fee.

• One is able to repay debts within one’s chosen time span

At the time of going for Debt Settlement, it is advisable to settle higher interest rate charging debts first. Doing this will bring most dramatic change is one’s monthly budget.. Generally a credit card debt settlement case might take up to 3-9 months which can be shortened to 1-3 months if someone wants to speed up the process of settling debts. On an average charges of debt reduction firms varies between 8%-15% of the total outstanding debt but one should do a thorough verification of the company before going for the service.

A certain time period is allowed by a debt settlement company for settling one’s debt which is generally 36 months and during this time the creditor needs to agree to, on a total amount for negotiation. To get debt settlement help for settling debt one need to qualify for the program. Process of getting qualified is consulting a debt settlement consultant with details of personal debt to see whether one qualify for the program or not. If one do qualify, a financial program is set up to meet one needs, this will help to determine how much money is required to put aside each month to start paying off one’s debts.

Debt settlement is one of the best ways for:

Ø Improving one’s credit report.

Ø Avoiding harassment by debt collectors / creditors.

Ø Saving time by making a single payment each month.

Ø And, also helping to save while paying off debt.