Debt settlement is a legal debt relief method which helps a debtor to negotiate with his creditors and eliminate a part of his debts.
A debtor having at least ten thousand dollars in unsecured debt can avail this offer.
The benefits of this method are obvious as far as the debtor is concerned.
But why would any creditor agree to this arrangement.
One of the main reasons is to retrieve at least a part of the money.
If the debtor is on the verge of filing for bankruptcy, then the creditors are at a risk of losing the entire loan amount.
Even if the account is on the verge of going to collections then the creditors are more interested in settling the account than selling the account to collections.
The debtor needs to pay a certain amount of money to the creditors in order to negotiate the settlement amount.
If you have enough savings then you can pay it off in a single down payment as most of the creditors want the amount in a single payment.
If you do not have that amount saved up then you can open a new account to save for certain time and then proceed with the negotiation.
It is possible for the debtor to negotiate the deal himself but if the debt amount is high the creditors are more reluctant to eliminate a huge sum of money.
Hence to get a better bargain it is better the assistance of a debt settlement company.
They can assist you from convincing the creditors to the negotiations.
The fee charged by these companies is also nominal.
They can help their customer's get a debt reduction of up to 40% to 60% of the total debt amount.