Review of Debt Reduction and Debt Settlement Methods
There are two basic ways to relieve your debt. Debt Reduction or Debt Settlement, Debt Reduction involves making a payment plan to bring the amount in arrears up to date. With this option creditors may be willing to negotiate low or no interest to allow you to pay off the entire debt over several years. Debt Settlement is when you negotiate with the creditor to settle on your debt, by allowing you to make one lump sum payment (and in some cases several payments) to settle the debt for less than you owe. Debt Reduction is usually a more favorable option to your credit than Debt Settlement, as a creditor always prefers to get the full amount owed, even if it's late.
Here is a description of both options and how to organize them:
Debt Reduction means you set up a payment plan to get your payments back on track and current. This means that you can no longer meet your current payment obligations that you have set forth, and you need to change them to fit your current life situation. This means that you will have lower payments and a longer time to pay it off. Arranging a payment schedule for this is important as it will stop any legal or collection action. In order to make this a reality, you will need to write a letter to a creditor explaining your situation and why you require a new payment arrangement. A creditor may not be satisfied with your first request, but will respond to you and eventually you will find yourself agreeing on the arrangement.
Debt Settlement means that you agree to pay your creditor a lump cash payment in order to settle your debts for less than you owe. This will not have the most possible effect on your credit, as you will not have paid the loan or credit card in the manner and for the amount that you agree it. This option is more preferable to a lender than bankruptcy where a creditor will receive nothing; you will need to have cash to make one payment to the lender. When settling with a lender, you will need to make sure that they respond in writing, so that they cannot sue you for damages after you have settled the debt for less than what is owed.
The decision to choose can be difficult, but it is important to be realistic, after you have determined how much you have to spare to make debt payments, make a decision between Debt Reduction and Debt Settlement based on what you can realistically afford and what will bring you out of financial dire straits.
Ian Stanton
Director of Marketing
B-EZ Enterprises
(480) 278-3717
email media@2settlemydebt.com
website http://www.2settlemydebt.com
Subscribe to:
Posts (Atom)
