Debt Settlement

Debt settlement can provide financial relief with credit card and unsecured debt. We are a debt settlement company that specializes in debt reduction services that provide in most cases a better alternative than a chapter 13 bankruptcy.

How much can I save by negotiating my debts?

In the initial contact letters, creditors will typically offer a settlement of 75 or 80 cents on a dollar. But in the end, most of credit card debt accounts settle in a range of 30 to 50%. Debt settlement programs typically last 12 to 36 months, with the money you put in each month for debt settlement going into an escrow account until there's enough there for the debt negotiator to use for a settlement payment.

According to a recent survey conducted by the National Association for Business Economics, the combined threat of subprime loan defaults and excessive indebtedness has overtaken terrorism and the Middle East as the biggest short-term threat to the U.S. economy. As a result, an increasing number of borrowers are turning to credit card debt relief programs that allow them to negotiate away a significant part of the balance that they owe. 40 to 55% debt reductions are being reported by debt settlement companies every day. The thought of eliminating 50-60% of your debt is becoming a reality. Creditors would rather take a partial settlement than nothing at all, which is pretty much what they would get if you filed for bankruptcy.

What kinds of debt can I negotiate?

Debt negotiation will only work for unsecured debt like credit card debt, personal loans or medical bills. Negotiating credit card interest alone could save you a pretty substantial amount of money because credit cards have compounding interest. But, you'll typically also be able to negotiate down the balance. If you owe on student loans, you may be able to get penalties and interest reduced. And, although automobile loans are secured loans, you may also be able to negotiate down interest and penalties on those, as well. You may also be able to negotiate a forbearance on your student or auto loan, which would allow you to take a break on your payments, so you can get a chance to get back on your feet financially. But, you typically cannot get the principal balance on either of these types of loans reduced.

But, there's good news for those who owe on student loans. Starting in July 2009, struggling grads can opt for a program that bases loan payments on up to 15% of their annual discretionary income, defined as gross income above 150% of the federal poverty level. (The 2008 poverty level for an individual is $10,400, plus $3,600 for every additional family member.) The College Cost Reduction and Access Act of 2007 increases funding for financial aid, offers tuition assistance for students who plan to teach and helps struggling graduates repay their student loans.

How much can I expect to pay for a professional debt negotiator?

Most debt negotiators charges range from 8%-15% of the total outstanding debt. Some calculate their fees based on what they can save the debtor through their program based on a fee of 25% to 33% of the savings.

Debt settlement should only be used as a last resort to avoid bankruptcy because it has a seriously negative effect on your credit. But, if your credit report shows multiple accounts that have been charged off by creditors, the debt settlement may actually improve your scores a little because no more negative information will appear after the credit reports the account as Settled" or "Paid in Full for Less than Full Balance". This derogatory information will stay on your credit reports for about 7 years. A bankruptcy can stay on your reports for up to 10 years, and it generates a public record about you. This means that anyone who wants to know will know that you filed for bankruptcy.