Are you struggling under an unmanageable amount of debt that you cannot afford to repay? Debt settlement is an approach to reducing your debt. Through debt settlement, a creditor and debtor make an agreement on a reduced balance that will be considered as payment in full. Debt settlement involves negotiating with your creditors to reduce your debt in exchange for a lump-sum payment.
Why Do Creditors Agree to a Settlement?
The goal of any creditor is to obtain as much repayment as possible. Many can be convinced that settling the debt is a viable option, especially if the consumer is financially troubled and considering bankruptcy.
Successfully negotiating a settlement generally requires convincing your creditor that you have few financial options and they need to accept whatever you can afford to pay. You must be able to show that you cannot repay the full debt, but can afford to pay off a portion of the debt all at once.
To convince your creditors that you have no other options, and may even be considering bankruptcy, a skilled lawyer can handle the negotiations on your behalf.
In general, only unsecured debts may be settled. Unsecured debts include medical bills and credit card debts — not student loans, auto financing, or mortgages. For the debtor, this makes obvious sense; they avoid the stigma and intrusive court-mandated controls of bankruptcy while still lowering their debt balances, sometimes by up to 50%. While, for the creditor, they regain trust that the borrower intends to pay back the debt instead of filing for bankruptcy.
Negotiating with a Collection Agency
Negotiating with a collection agency is somewhat similar to negotiating with a credit card company or other original creditor. However, many collection agencies will agree to take less of the owed amount than the original creditor, because the junk debt buyer has purchased the debt for a fraction of the original balance.
As a part of the settlement, the consumer may request that the account be removed from the credit report, which is generally not the case with the original creditor. With the current economic crisis, more credit card companies may be willing to settle existing credit card debts rather than add to their already large written-off bad debt.
Beware of Debt Settlement Scams
Debt settlement is a legal way to reduce your debt to an affordable level. Still, there are many debt settlement companies that will not represent your interests. These companies may misrepresent the reduction you will see, fail to disclose that you may be sued if you stop paying your creditors, and charge you substantial fees before settling any debts.
Contact Agruss Law Firm, LLC Today
If you are overwhelmed with debt and want an experienced negotiator to attempt settle your debt at a reduced amount, contact Agruss Law Firm, LLC. We have helped countless consumers receive debt relief and/or debt reduction.
We will seek a favorable debt settlement on your behalf by acting quickly, assessing how much you can realistically pay per month or upfront, and exploring your options with you. While debt settlement may be your best option, you do have other tools. We will help you consider all options, including bankruptcy.
Agruss Law Firm, LLC, has built relationships with credit card companies and collection agencies and can often times come to a settlement agreement quicker and at a more favorable rate than a debtor acting on their own. Contact Agruss Law Firm, LLC, to see if debt relief and/or debt reduction is an option for you.
