In the last post, I answered the question “does debt settlement work.” Today, I wanted to explain a little bit more of how the process of debt settlement works.
As you fall behind on your credit card payments, your creditors will continue to hound you with phone calls and letters urging you to make a payment on your account or you will fall further behind and negative information will be reported to your credit report.
From the moment you fall behind your interest rate is jacked up to around 30% and you get hit with a $39 monthly fee every time you are late.
Sooner or later, they will also reduce your credit line to just over your current balance so they can hit you with another $39 over the limit fee as soon as your balance goes over the limit.
For the first three months, your creditors will try and get you on a payment plan or try to get you to pay something on your account.
You cannot negotiate a debt settlement at this time in most cases.
When you are 4 to 6 months behind, your creditors will then try to minimize their losses on your accounts and be open to settlement.
Their statistical models show that the farther you fall behind the less likely you’ll ever make a payment to them again.
This is why they will be willing to negotiate with you and reduce your balance for a lump sum payment through a settlement offer.
They would rather get something paid on your account instead of taking a total loss on your account.
This is when you can settle your credit card debts for 60 to 75% of what you owe.
That is how debt settlement works. You can do it yourself with a little coaching and information from people who have done it before.
You do not have to use a debt settlement company to help you with this. Using a debt settlement company can only drag out the process of debt settlement and increase the likelihood of you getting sued by your creditors.
You can learn everything you need to know about debt negotiation and debt settlement with the Zipdebt program.
I used it to settle over $43,000 worth of credit card for just over $13,000.
You can use it to drastically reduce your unsecured credit card debts in less than 12 months.
I’d highly recommend you check it out.