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What is Settlement of Debt and How Does It Work?

What is debt settlement (also often called debt negotiation and debt reduction)? It is the legal process of getting your creditors to accept less money than you owe them for your unsecured debts most commonly credit cards, medical bills, large utility bills, and unsecured personal loans. Settlement of debt is very common and has become more so as the amount of consumer debt has increased over the past few years, particularly with credit cards.

When you are financially unable to repay everything you owe, your creditors will accept a settlement after a negotiation process. The result is that you will pay them a lump sum of money and they will release you of further liability. The amount agreed to is legally binding.

This negotiations are usually handled on your behalf by professional debt settlement company that understands the process and often knows the right people to negotiate with inside the credit card companies. They do this for thousands of clients so the process is typically smooth and takes less than 3 years to complete which gives you time to save up the money you will need to pay the reduced negotiated debt amount.

Debt settlement is one solution that is a viable alternative to bankruptcy that allows you to reduce your debt and become debt free faster than many people are able to do on their own.

Choose a debt settlement company who you trust and they will evaluate your situation. If you qualify for their program they will customize a payment plan for you. Many people who choose this route to become debt free are able to achieve settlement of their debt by amounts of 50% or more.