Debt Settlement

If you are currently in an unstable financial position, use your communication skills to negotiate with your creditors on lowering your debts and/or interest rates. Just making the effort to work with your lenders to reduce your debt will save yourself lots of stress.

Before calling your lenders review your budget to get an overview of your financial situation. See how much money you can actually afford to pay monthly without putting yourself in financial jeopardy. List out who you owe money to and prioritize your list by order of payment. Depending on your personal financial needs there are lenders whom you will choose to pay off first.

Once you have organized your information make that phone call. In your call be sure to note the number of years you have been a customer, your history payments, and your current financial situation (including how much you can afford to pay monthly). By doing so and sticking to the facts - the representative or someone at the company may be able to help you out with your financial situation.

By being professional, polite, organized, realistic, and flexible you can make great in-roads with your creditor. Negotiating down your debt is not guaranteed, but it certainly would not hurt you to try. In the worse case scenario, despite receiving a "no" you have tried your best to work out a settlement and have faced up to your debt head-on. If at first you do not succeed, try and try again. In the current economic market, what may not seem like an appealing offer to a creditor, now may look like a great deal several months down the road.

Many people rely on debt relief programs to help them manage bills or proceed with a bankruptcy filing; however, many of these programs aren't as successful as advertised because of their structure.

Unfortunately, stringent guidelines dictate the process by which debt relief programs are told to help consumers manage bills. So while the intentions to assist consumers are good, their actions often make matters worse.

A Closer Look at Debt Relief Programs

Debt relief programs can come in the form of credit counseling, debt management plans, debt consolidation, home equity loans and Chapter 13 bankruptcy. While they are different in how they help consumers manage bills, they have the same goal: to clean up debt.

Consumers who use these services may show up voluntarily, but often are ordered to get some help. For instance, a person may want to file for Chapter 7 bankruptcy, which wipes out all debt.

However, before this can be done, the court will order the person to go to credit counseling to determine if the bills can be managed another way, such as through a payment plan. If a person files a Chapter 13 bankruptcy, they will also be court ordered to pay back all debt in monthly payments.

The Success Rate of Debt Relief Programs is Low

While debt relief programs offer consumers a way to manage bills and helps them eliminate debt in a responsible way, very often the success rate of these programs is low.

This is because the fixed monthly payment plans set up by the programs, court system or even the IRS look at debt-to-income ratios to determine repayment. Unfortunately, they don't take into account unexpected expenses that could stand in the way of a payment. With no available flexibility, debtors often default payments. As a result, only 25 percent of debt relief programs actually survive.

Are There Alternatives?

Luckily, there is an alternative to these programs called debt settlement.

Debt settlement offers flexibility to miss payments or adjust payment amounts as needed. You simply set up a savings account then build up money to pay one debt at a time. Once that debt is paid, you start over. This offers the flexibility many need to manage bills and debts according to their life's circumstances.

While it's unfortunate that most debt relief programs fail, it's good to know there are alternatives. By considering debt settlement as an option, you may be able to successfully manage bills and debt for the first time in years.

It's tough to find yourself drowning in debt, which is why many individuals decide to choose debt settlement as a way to resolve the issue. However, not everyone suggests debt settlement as a good solution. To determine if it's right for you, take a closer look at what it is and how it works.

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