Debt Relief Options: Debt Settlement
What is debt settlement?
Debt settlement is the process of negotiating with your creditors to settle your debt for less than what you owe. One thing you need to realize is that this program works best for people that are soon approaching or already in a financial hardship of some kind. You don’t have to wait until Hell or high water comes, if you see it coming you can be proactive and debt settlement may be a very good solution for you even if you haven’t taken a tumble yet.
If you are going towards that tumble, or you’ve already fallen behind, you’re on that treadmill, especially if you’re paying high interest on a lot of debt, this may be a very attractive option for you.
Debt settlement is definitely the most popular option out there…
BUT THERE’S A LOT ABOUT DEBT SETTLEMENT YOU MUST KNOW, BEFORE YOU EVER EVEN THINK OF ENROLLING INTO A DEBT SETTLEMENT PROGRAM!
Put yourself in the shoes of creditors, what can you do?
Lawsuits…
Collectors and creditors alike would love for you believe they want and will sue you, get a judgment, garnish wages, etc. They bank on this general fear, but you may be shocked to learn the truth about how unattractive lawsuits actually are to creditors.
Let me be clear, a creditor can, and may, file a lawsuit against you if you default on your debt (fall behind on payments). They could sue you if you’re a day late. This is obviously unreasonable, but what’s not so obvious is how unreasonable lawsuits are in general, even if you are severly late. Your creditors DO NOT want you to know this, as they would rather you live in fear thinking they could flip a switch and get a garnsihment or have you put in jail – neither of which is true.
Here’s why it’s not attractive to a creditor to sue you:
- 80% of judgments are never paid
- “Hard to squeeze blood out of a turnip”
- Higher likelihood of BK = Creditors get nothing
- Court cost and attorney fees must be paid, adding to the creditors risk
- Statute of limitations
- 3 year factor
Collectors…
- Average amount bad debt is sold for is 3.4 cents on the dollar.
Traditional choices for creditors with customers in a hardship: sue or sell to collector…
So when a debt settlement negotiator comes along and offers 40, 50, 60%, it’s a smoking deal.
Debt settlement is actually the best way for your creditors to get the most money from someone in a financial hardship!
This is why debt settlement is such a popular option, because not only do we save you a ton of money, but it’s also a great deal for the creditor. You see, they account for a certain amount of people every year to be in a hardship and unable to pay.
How Debt Settlement Works
When you enroll into a program for debt settlement you sign a limited Power of Attorney. That limited Power of Attorney is sent out to each of your creditors. It basically says to them that you’re in a financial hardship, you will no longer be making any regular monthly payments, and instead you’ll be saving up your money to settle the debt in the future. It’s also a notice for your creditor to no longer contact you, but to contact your negotiator who is representing you. It informs them they will be contacted in the future when you have enough money saved up to offer a settlement.
From that point forward, you no longer make any regular monthly payments to your creditors. You’re going to make one payment each month for the same amount, the same time each month, to a special purpose account that is set up for you. Each month your payment is transferred from your regular account into your special purpose account. Your payment amount is usually substantially less than your current minimum monthly payments that you’re making on your cards.
This account will build up month after month. Once you’ve saved enough money in that account to offer a settlement to one of your creditors, your debt settlement negotiators will contact them and negotiate a one-time lump sum payment to settle the account to a zero balance. This typically can be negotiated to about half of what you owe.
Once a settlement is made, your debt for that account is wiped out forever.
Month after month goes by and your funds build up again, and they’ll settle the next account, and so forth, until usually within about 24 months you’re completely debt free by settling all of your accounts.
That’s the main process of how debt settlement works. There are fees for the program. Usually with the fees included, you are going to pay about two thirds of what you owe and you’ll save about a third of what your current balances are right now – whatever your total debt is.
Keep in mind that the fees would be included in that two thirds that you actually pay. It’s also included in the monthly payments that you get as a quote so those fees are known about up front and taken out over a period of about 18 months.
Fees and everything included, you are still saving a ton of money. Not just the third or so of your current balance, but also all the future interest and fees that you will no longer have to pay.
When you go through this program, interest and fees are effectively eliminated. The creditors will still say “you owe interest” or “you owe fees” once you stop making those payments, and the balance may increase, but negotiations with them are based on your current balance when you enroll.
When you’re given a quote, that’s a quote for the total cost, meaning basically all the additional interest and fees come out in the wash. Whereas by example, if you were just going to make minimum payments; if you’re paying 20% to 30% in interest, you’re going to pay two to three times what you owe in interest alone by the time you get that paid off.
That’s a tremendous savings! Now you’re getting out of debt quickly in 24 months and you can take that savings each month and invest it to start earning interest; where your money is working for you.
The difference it can make say 30 to 40 years down the road:
If person ‘A’ were making minimum payments and it took them 30 or 40 years to pay off their debt; person ‘B’ went through debt settlement and after two years began investing money and earning interest, then by the time person ‘A’ is out of debt, person ‘B’ is a millionaire. That’s the difference. It’s not that complicated over all, it’s just a matter of learning about it and doing it, taking action.
Cost & Savings of Debt Settlement
There are fees for these programs. Usually with the fees included you are going to pay about two thirds of what you owe and you’ll save about a third of what your current balances are right now, whatever your total debt is. Most importantly; eliminating your debt quickly will allow you to take control of your cash flow, stop paying interest and have cash every month to save, invest and get your money working for you.
After you graduate and your debt is completely wiped out for a fraction of what you owe, not only will you have saved over $10,000 from your current balance (if you’re in the average client bracket), but you will be saving tens of thousands of dollars that you would otherwise pay in interest to keep your credit score where it is in the short term. You also will have ALL the money you’re currently paying in minimum payments BACK in your pocket.
Now I know you may like shopping. Hey, I’m a guy who likes to shop too. Let me tell you… taking CASH out of an interest earning account working FOR me 24/7 to go buy shoes, clothes, dinners, vacations, and nights out on the town feels so much better than it ever did charging up a credit card, constantly working against me.
Overall, what we’re looking at here is the difference between being a slave to debt with money working against you vs. being debt free with money working for you.
The difference is huge.
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Thank you for the opportunity to serve you!
Here To Be An Asset To You,
Jesse Niesen
DebtGOTOGuy.com
Debt Relief Guide Online
888-928-DEBT(3328)
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