Debt Settlement

Debt settlement also known as debt arbitration or debt negotiation, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. Debt settlement is designed to work within your budget and eliminate debts in the shortest time possible. When you choose to explore the option of debt settlement, be sure that you are dealing with a trusted organization, one with certified professionals that provide accurate and timely debt advice. These professionals should be asking you many questions, including; the specifics regarding your debt (type and amount) and what has changed in life that caused you to fall behind (hardship). If your debt and hardship qualify for enrollment in a settlement program, it’s time to learn this form of debt relief from the inside out. This is where your provider must be completely transparent, providing mandatory disclosures under rule by the federal government. Some of the disclosures will include, the effect debt settlement will have on your credit score, the fact that your debt amount can and will most likely increase due to late fees and interest, collection efforts will continue during the program, as well as the possibility of litigation. New rules imposed by the Federal Trade Commission also ban advanced fees charged by debt relief service providers, with very few exemptions. So if you are asked to provide any type of upfront fees, don’t walk, run!

Ok, you feel good about moving forward, now is the point where a certified debt specialist will perform a detailed financial analysis to insure you can reach the finish line. This analysis will determine how much discretionary income you have and how much you can comfortably contribute into a monthly savings account for the purpose of settlement. Once the savings amount is agreed to, the agent will prepare a client agreement for your review and execution. This agreement will be accompanied by a special purpose account application (SPAA) to establish a trust (savings) account in your name. By opening this account you agree to an electronic transaction (transfer), each month for a specific period of time, from a designated account that you own, into your new trust/savings account. As these funds grow the negotiations team will begin speaking with your creditors, based on the action plan laid out in your good faith estimate, in order to settle your debt. As settlement agreements are reached, your negotiator will contact you personally to discuss the contemplated transaction and acquire your approval. Once a settlement is agreed to, it is provided in writing by the creditor, in order to insure accuracy and proof of said agreement. This process will continue until the last creditor/debt is settled hence eliminating your unsecured debt.