Knowing The Debt Settlement Process

By Author: J.J. Yong
Total Articles: 963
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For people who are having trouble paying credit card debts or medical bills, one of the possible solutions to overcome their debt issues is through debt settlement. It is a process where the debtors can negotiate their bills to a smaller amount and the creditors agree not to pursue collection of the forgiven debt.

Below is the flow of the whole process:

1) Stop making payment

Once you have decided to go for settlement, you need to find out how long you have stopped making payment to your account. Settlement works best when you have past due for about 3 months.

2) Start negotiation

Start contacting your creditor to explain about the circumstances that are making it difficult for you to pay off your debt, for instance, a job loss, health problems or income change. At the same time, make a proposal to your creditor by stating the settlement amount you can afford to pay. The negotiation may take some time as it includes offers and counter offers. Creditors typically accept a lump sum payment of 20% to 60% of the total debt.

3) Finalize the agreement

Once ...
... both parties have come to the agreement, the debtors are reminded to obtain a settlement agreement IN WRITING from the creditors before making their payment. Once the accounts have been settled and paid, the debtors must ensure that their creditors report that the accounts have been "paid as agreed" to the credit bureaus. This step is important as it has great impact on the debtors' credit ratings.

The above said process will be completed in about 2 years. The duration can be longer if the settlement proposal is not agreeable by the creditors. Make sure you have enough patience and determination to go through the process.
For more information about debt settlement companies and online debt settlement, visit DebtSettlementPoint.com.