Europa

Credit card companies have aggressively marketed their services over the years to maximize their profits and to outperform their competitors. They freely adopted their marketing practices even though they could

Credit card companies have aggressively marketed their services over the years to maximize their profits and to outperform their competitors. They freely adopted their marketing practices even though they could foresee the credit they were authorizing would ultimately lead to account balances becoming greater than some of their customers would have the means to repay.

When customers cannot repay what they owe, credit card companies view the losses as a cost-of-doing-business or a price they must pay in order to win a larger market share of the total profits available to the industry as a whole. Yet, they do not accept losses casually. They pursue collection efforts vigorously.

Creditors accept losses only as a last resort, after a clear demonstration that repayment in full is truly beyond their customers’ means. What credit card companies view simply as a cost-of-doing-business should not ruin your life.

If you have a bona fide financial hardship, you are entitled to debt relief. One way to obtain the debt relief you deserve is through the debt settlement process.

Bona Fide Financial Hardship

A bona fide financial hardship is more than a mere inconvenience. It is a good-faith impediment to paying your creditors what you owe them.

“I don’t have enough money to pay my bills,” is not an expression of a financial hardship. It is simply a description of the result of your financial hardship.

A bona fide financial hardship in the minds of creditors is ordinarily something you could not easily foresee or readily mitigate. Hardships that represent a permanent change in a consumer’s circumstances are stronger hardships than those that are clearly short term or have a definite termination point.

A bona fide financial hardship can take many forms, for example unemployment, a reduction in hours or pay rate, personal medical problems interfering with the ability to work, medical problems of dependents creating a financial drain, a sudden increase in the cost of living such as losing below market housing shared with a relative, the birth of a child that reduces a two-income family to one income, a divorce that produces two households to support from the income that heretofore was supporting only one household, etc.

The Debt Settlement Process

The objective of a debt settlement program is to liquidate your unsecured debt in the shortest time possible at the least cost possible. The strategy is for you to accumulate money in a Settlement Savings Account, that you own and control, to fund settlements the debt settlement company negotiates for you with each of your unsecured creditors over time.

Consumers in debt settlement programs typically do not continue making monthly payments on their credit card accounts. Instead they deposit to their Settlement Savings Account money they would otherwise pay to their creditors.

There are two reasons consumers ordinarily do not continue making even minimum monthly payments once they begin their debt settlement programs. First, most people don’t choose debt settlement services as a debt relief option until their financial hardship makes it impossible to continue making minimum monthly payments. Second, those who do continue making minimum monthly payments find that their creditors generally refuse to engage in debt settlement negotiations because they are quite happy to have the consumer continue making only minimum monthly payments forever.

Settlement Savings Account

In addition to your primary bank account you need to maintain a separate Settlement Savings Account that the debt settlement company ordinarily will help you establish at an FDIC insured institution. You make monthly deposits to your Settlement Savings Account to accumulate money to fund settlements that are negotiated.

A successful debt settlement program requires regular monthly deposits to your Settlement Savings Account. The amount of these monthly deposits depends upon the total amount of unsecured debt you need to settle. The amount you set aside monthly should allow you to fund settlements to liquidate your total unsecured debt in 12 to 36 months, including paying the fees charged by the debt settlement company when an account is settled. In general, the shorter the duration of your debt settlement program is, the more likely favorable settlements can be negotiated.

Negotiating & Funding Settlements

The pace at which you are able to accumulate funds for settlement will determine when your debt settlement company can engage in settlement negotiations. Typically, funds build up, a single settlement is completed, then time passes as funds build up again and another settlement is completed, and so on until all accounts are settled.

When a settlement is negotiated, the creditor releases you from any further obligation to pay in consideration of receiving a single lump-sum payment you can afford to pay them. The amount ordinarily equals only a portion of the outstanding balance they claim is then due.

When funds are available negotiations can be conducted with more than one creditor simultaneously. Of course, you cannot accept or commit to more settlements than you can fund at one time. There is an advantage to you in your debt settlement company negotiating when your creditors know you temporarily have a limited amount of funds you can apply to settling one account. If they don’t want to wait until the next time that happens, they are more likely to agree to a favorable settlement now.

Is Debt Settlement A Good Option For You?

Debt settlement can be a very effective way for the right person in the right circumstances to get the debt relief they deserve. However, debt settlement is neither a process without risks nor a panacea. It is a process that requires a firm commitment from anyone who elects to pursue it. Anyone considering debt settlement should consult with a professional debt settlement company concerning the risks and benefits of all debt relief options in order to make an informed decision about what path to follow.

Debt Relief Advocates is the leading source for debt relief information, news, analysis and commentary. In addition to covering the full range of debt settlement services and options, they provide consumers with online access to a free DIY debt settlement program and a turnkey full service debt settlement program.

Artykuly o tym samym temacie, podobne tematy