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Why Does Debt Settlement Work In 2012?

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If you are looking for one of the fastest ways to resolve your credit card debts and medical bills you should take a look at debt settlement, also known as debt negotiation. It has worked in years past and it will continue to work in 2012 and beyond.

Why does debt settlement work?

Debt settlement is an alternative to bankruptcy. However it is better than filing bankruptcy for both you and the lender. Let’s look at an example from the corporate world to see why.

American Airlines just filed for bankruptcy protection to help it shed some of its debts. In the process the shareholders equity is wiped out and the stock is essentially worthless.

If the shareholders had the option of getting 25%, 35% or even 50% of their investment back instead of zero don’t you think they would have taken it?

This is what happens when you use negotiate with your creditors to reach a fair settlement of your debts before you are forced to file bankruptcy. You avoid a black mark on your credit report for 7 to 10 years, you get to reduce your credit card debts and medical bills by as much as 75% and sometimes more, and your creditors are satisfied getting something back on your account instead of having to write off the full balance as a total loss.

This is why debt settlement still works in 2012. People just like you are struggling every day with job losses or work reduction, medical bills, back taxes, student loans, and a sluggish economy.

The major credit card banks are aware of this and will work with you to settle your unsecured debts once you are about to file bankruptcy. They will accept pennies on the dollar instead of losing your entire balance as a bad debt.

They won’t work with you if you are current and making at least the minimum payments each month. They will only work with you once you have demonstrated a financial hardship and shown you are unable to make your payments each month for at least 4, 5 and 6 months.

At the 6th month mark that is when they are forced to write off your account as a bad debt and take the loss on your account. It is at this point that you can make a settlement offer and stand a good chance of it getting accepted.

You can do it yourself or you can hire a debt settlement company that will do it for you an a contingency fee basis – meaning they will only get paid if they deliver results.

Filing bankruptcy is a last resort option and has terrible consequences on your credit reports and credit scores. Take a look at what debt settlement and debt negotiation have to offer you before you file.

Debt settlement works to offer you debt forgiveness without the negative mark of filing for bankruptcy.

You can start by getting a free confidential debt analysis and see how much you can save

Does Debt Settlement Affect Your Credit Score?

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Even though debt settlement can help you eliminate your unsecured credit card debt in a matter of months, you may be concerned about the effects it has on your credit report and credit score.

And this is a very valid concern because so much of your financial life is affected by what is in your credit report and your credit score.

The short answer to the question does debt settlement affect your credit score? is yes.

35% of your credit score is determined by your payment history.

Once you start missing payments on your credit cards your credit score will drop.

Good FICO Credit Score Before Debt Settlement

If you start with a 700 credit score, at the end of your debt settlement program, you could end up with a 500 or below credit score.

Bad FICO Credit Score After Debt Settlement

That’s the bad news.

The good news is you will be out of credit card debt.

So here’s a question for you, would you rather be out of $43,000 in credit card debt in less than one year or would you rather take up to 46 years to pay off $43,000 of debts making minimum monthly payments?

Not to mention the $66,000 in interest charges you pay over that 46 year period.

Would you rather have a good credit score or would you rather be out of credit card debt?

Yes debt settlement hurts your credit report and score but the effects are temporary.

Once you become debt free, your debt to income ratio is lower and it will look better to potential lenders.

Also, once you are credit card debt free, you can start rebuilding your credit report and have a good credit score in about two years.

That’s much quicker than recovering from bankruptcy.

If debt settlement is to work for you, you have to decide if you would rather be out credit card debt or maintain a good credit score because debt settlement does affect your credit score temporarily.

-Adam

Does Debt Settlement Work?

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Hello-

After having settled $43,250 for only $13,054 on my own, I can categorically state that debt settlement does work.

It’s no secret that people are hurting financially these days.

That’s why you see so many commercials these days offering debt relief services to help you reduce and eliminate your credit card debts and get your life back.

NEW YORK - MAY 20: In this photo illustration...
Image by Getty Images via Daylife

The credit card companies want you to do everything you can to keep paying them without knowing about hardship programs like debt settlement that can relieve you of your many financial burdens.

But when you cannot afford to keep up with your monthly bills or an unexpected medical bill or job loss comes around, you do not have to resort to filing bankruptcy.

In my situation, it only took one month for everything to come crashing down.

Everything was running along smoothly, all the bills were getting paid and everyone was happy.

Then I got a bill in the mail I was not expecting, an unpaid hospital bill from my daughter’s hand surgery several months prior.

Then my student loans came out of deferment after 2 years. So that added another $200 a month to my monthly bills.

Then I found out I owed over $8,000 to the IRS. So that added another $250 a month to my monthly bills.

So that was another $500 a month in new bills that I could not afford to pay anymore along with all the other credit card bills, life insurance, car insurance, renters insurance, rent, and car loan.

For the first time in over 7 years, I missed a credit card payment.

And boy did the phone calls start.

At one time, I had over 20 missed calls on my phone before noon.

It wasn’t until I was several months behind that I learned about debt settlement and how I could negotiate with my creditors to pay a reduced amount and get the entire balance wiped out.

The debt settlement companies that I learned about promised 40-60% reductions in my credit card balances over a 36 to 48 month period.

What I discovered on my own that negotiating with the credit card companies on my own, I could have my entire balances reduced by 65 – 75% and totally eliminated in less than 6 months.

You can do it yourself debt settlement and talk and negotiate with your creditors and save all the fees the debt settlement companies want to charge you.

You can also minimize your chances of getting sued by working with one of those debt settlement companies you see on TV.

Yes, debt negotiation and debt settlement really work.

NEW YORK - MAY 20: In this photo illustration...
Image by Getty Images via Daylife

You can reduce your balances on your own.

It is not a scam.

There are several home study courses and books that will teach you all you need to know about settling your own credit card debt.

Trust me I bought and read them all. I learned as much as I could so I could save the most money. Spending a couple hundred dollars on how to settle your debt books was worth it when I finally saved over $30,000 on my credit card debts.

And I got out of the financial crisis I was in.

If you find yourself struggling to keep up with your monthly payments, if you are going through a financial crisis due to an unexpected job loss, reduction in income, unexpected medical or hospital bill, then debt settlement may work for you.

The course you want to check out is called Zipdebt. In there I got the most comprehensive information about how to settle my debts, how to deal with the taxes on the cancelled debt, how to deal with the debt collection calls, how to get the best settlement, and how to not get sued by my creditors.

I encourage you to check it out if you need to get out of credit card debt that you can no longer afford to pay.

It may be one of the best things you ever do to improve your finances.

Thank you for reading my story and I wish you the best.

-Adam

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