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Debt Settlement - Fortunately, there are options for debt relief besides the drastic effect of filing bankruptcy. Debt settlement is one of the most practical debt relief methods available. When done correctly, debt settlement can reduce your unsecured debt by 50% or more.
While it is possible to pursue debt settlement yourself, the process usually begins with enrollment in a debt settlement company. Upon enrollment, you will save up your disposable income in a savings or “special purpose account”. As the money in your account begins to accumulate, the company you enrolled with
will negotiate with one of your creditors at a time to agree to pay off amount that is less than that of your original debt.
Once your account has grown to the agreed upon amount, they are paid and your account is considered closed and no further payments will be due. The process then repeats with each of your other creditors until all have been paid. It may seem against intuition that creditors would accept payment that is less than the full amount
they are owed, but in reality it makes a great deal of sense. After all, if a creditor turns down a proposed settlement, and the borrower files bankruptcy, his or her creditors often receive none of the debt they had been owed. Obviously,
it is in a creditor’s best interest to receive a partial payment rather than nothing at all. A word of caution here: trying to settle your debts yourself can be very difficult. Credit card companies are often reluctant to negotiate directly with the debtor and they may even tell
you that they don't do settlements under any circumstances. This is generally a boldface lie, but they would rather continue to try to intimidate you as long as they are dealing with only you. When your account goes to a settlement company, they realize that you have someone on your side
and they will no longer be able to intimidate you with threats.
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