Credit Loan > Debt Consolidation > Debt Settlement Might Be Better Than A Debt Consolidation Program

Forget Debt Consolidation, Try Negotiating A Debt Settlement

Little did I know that I could eliminate all of my debt without filing for bankruptcy. I went to a debt consolidation services company and learned a few things that will help me to get rid of my debt quickly. The person at the office told me how I could settle my debt for less than I owed.

I have been in way over my head for a few years now, and a couple of months ago I lost my job. After I lost my job it did not take very long for me to fall really behind in all of my bills. The credit cards were the first bills that I was not able to pay and any money I got needed to go to rent. My creditors started to call me daily with threats of legal action and when I went to an attorney to find out about bankruptcy I realized that I could not afford to file.

Yesterday I got my tax refund in the mail, but it was only enough to pay off about half of my debt, or I could use the money to file bankruptcy. I decided to do what the guy at the debt consolidation company suggested.

What he suggested was to call my creditors and ask them for a settlement amount. Some people call a debt settlement plan debt consolidation, but they are not the same thing. A debt consolidation plan is an agreement between the debtor and the creditor to make reduced payments until the debt is paid off. Whereas, a debt settlement is an agreement to pay a lump sum amount to eliminate the debt completely, usually between 10% and 50%.

If you are in the same position as I am, negotiating a debt settlement with your creditors might be a better option than a debt consolidation program. When doing a debt settlement you should wait until your creditors offer you an amount that you are comfortable paying. When talking to them you need to explain that you are willing to pay the debt off for less than the amount owed.

One thing to remember though is to get everything in writing before you give them any money. Have the creditor send you a fax or a letter that clearly states that you will pay a set amount to settle the debt and they will remove any negative information from your credit report.

It is that simple. After a few months you should check your credit report to make sure that they removed any negative information. Once the negative information is removed your credit score might be better than it was before and you may not have to deal with a bankruptcy.