When it comes right down to it, debt settlement programs are aimed at getting consumers back on their feet financially. These programs are becoming more popular since borrowers are unable to mortgage refinance and use their home equity to consolidate debt due to the current housing downturn. Such programs help people avoid bankruptcies, while keeping their credit scores in solid standing. Debt settlement services certainly are not credit counseling-related venture, but a plan of action toward reinstating a zero balance with the creditor(s) involved.

You have to be past due on your accounts for creditors to give you debt settlement solutions.

•    Once you are anywhere from 90 to 120 days past due, creditors will be concerned with their ability to recover what you owe to them, so they will may be willing to work out a deal. If you have funds available, a deal may be struck, so that the next account can be negotiated. If Debt Negotiations fail, the creditor will wait until you have enough funds set aside to negotiate each account, one at a time.

Debt Settlement is not a long-term venture.

•    It is a short-term option, and it is only available to a minority of people. If you can acquire the needed funds, you may qualify for a deal that can get you back in the driver’s seat financially, saving you valuable time.

The best companies take the time needed to work out a plan that fits with your situation.

•    Creditors realize that life happens. As long as good-faith efforts are made, and your financial picture looks promising, the potential for a settlement exists.

The original creditor is legally entitled to call on you.

•    This is the law. However, your job is to communicate through your negotiator, and not directly to the creditor, so be sure to do your homework.

You have to approve any settlements that are reached with your creditors.

•    Once an offer to settle comes below the 50% mark, consumers are often notified by their negotiators. From there, you have the final say to either go with the settlement, or decline it entirely.
•    Once approved, your creditor will send you a letter with the specifics of the settlement agreement. After that, a settlement in full (SIF) letter is sent, which both states and makes official the fact that you now have a zero (0) balance owing, and that any past amounts are null and void (forgiven).

Finally, some parting tips:

As mentioned earlier, be sure that you have at least 40% of the amount owed on hand, or nothing is likely to happen. Additionally, you must be past due by a minimum of ninety days for a creditor to be open to the idea of pursuing a debt settlement agreement.  Be sure to keep all related correspondence in a file that is both organized and readily available, should any party come calling in the future. There’s nothing like the proof on paper to settle a dispute that was unexpected in the first place (life happens, remember).  Be prepared, do your homework, and spread the word to help others to find what might be their key to financial freedom.

DebtWatch.com – Debt Settlement Services