An Overview of Debt Settlement

Debt Settlement Background

Debt settlement involves a debtor and creditor reaching an agreement in regards to a particular debt. This agreement is usually made when the debtor is no longer able to make payments on a debt due to financial hardship. Typically, debt settlement revolves around making an agreement to reduce the overall debt balance in order for the debt to be settled and avoid legal action. 

Credit Card Debt Settlement

Credit card debt settlement is arguably the most common type of debt settlement. Credit card debt settlement can take various forms, though the most common may involve furnishing a lump sump payment or entering a debt settlement program in which payments are made. However, both will have the purpose of lowering the overall debt, and thus, settling the debt for a lesser amount than is actually owed. 

Debt Settlement Program

A debt settlement program can involve various factors depending on the nature of the debt and the creditor company. Furthermore, a debt settlement program can also vary in terms of the entity that is negotiating with the creditor companies. For example, debt settlement programs will differ if a debt settlement company is hired or if the debt settlement negotiations are done directly by the debtor. 

Debt Settlement Letter

A debt settlement letter is a great way for a person to initiate debt settlement negotiations with creditors. A debt letter not only informs creditors about the financial situation of a person, but also shows incentive that the debtor intends on settling the debt. A debt settlement letter should contain information and requests that will prove to be beneficial to the debtor, such as request to remove negative information from credit reports on the contingency that the loan is settled. 

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