Is Debt Settlement As Bad As Some People Say It Is - Can Debt Settlement Work

                                                                                         

Debt settlement is now a widespread practice and helps thousands of people to get out of debt every year. Despite this, not everyone who has used a debt settlement company has had a positive experience, and this has led to a certain amount of comment about the process being inherently bad. The fact is that, as with many other things, there are some very good debt settlement companies and some very bad ones.

It is unfortunate that some individuals are attracted by what they see as the easy pickings of people who are in a desperate situation. People in serious debt are vulnerable to those unscrupulous organisations that would take advantage of their situation to make an easy profit. It is these few debt settlement companies who give the industry a bad name, by providing expensive services that do not work, often for people for whom debt settlement is not the best solution.

It is not difficult to avoid these companies if you have an understanding of what debt settlement is, when it can be appropriate and how to find the best companies to work with. Debt settlement is extremely effective, if done by a reputable company and for someone in the appropriate circumstances. Debt settlement is used for very serious debt situations, usually for people facing possible bankruptcy or legal action for large amounts of debt. It can only be used for unsecured debts, and is particularly suitable for credit card debts.

The process involves a debt negotiator approaching all your creditors in turn to seek agreement to settling your debts for far less than the full amount. A good negotiator will typically manage to settle debts for between 40 and 60 percent of the original amount. The incentive for the creditor to settle is that the agreed settlement amount is to be paid off in a lump sum.

Once you start on a settlement program you stop paying all your creditors and put money away each month in a new account that you control. The money is saved up in this account and used to pay off the creditors when settlements are reached. The whole process can take some time, and depends very much on the creditors involved, their policies and other circumstances. On average the whole process might take between 12 and 30 months to complete.

If you think your situation may be suited to debt settlement, you need to ensure that you find a reputable and experienced company to deal with. There are advantages to using a larger and well established company, as they will probably be negotiating debts with your creditors on behalf of lots of other people too, which gives them a lot more power to get larger discounts. Debt settlement is well known in the US, but US residents would struggle to find anyone offering it, as there is an excellent alternative called an IVA. This is only available in the UK and is also a way to make a single fixed payment and get a large part of your debts written off.

Finding the right debt settlement company is no different to any other kind of service in that it is sensible to approach a few, so that you have something to compare. Apply online to about three organisations, then you can see what they offer you and select the company you are most comfortable with.

You need a shortlist of companies that you know you can trust, and the easiest way to get to that stage is to follow trusted recommendations for some of the most reputable and well established companies. The alternative is to carry out your own research.

About the author:
Read reviews and recommendations for the most reputable debt settlement companies and a list of the top IVA UK companies. K D Garrow has worked as a senior manager with significant financial responsibility for the last twenty years. His Debt UK/US website offers free, unbiased advice on a range of debt related issues, including debt consolidation, loans, bankruptcy, and budgeting.

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