GET OUT OF DEBT THROUGH A PROFESSIONAL FINANCIAL SERVICES FIRM. Debt settlement, also known as debt arbitration or debt negotiation, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. Debt settlement firms work with consumers, who have no cash to make settlement offers with the credit card companies on the consumers behalf.
Here is how it works: A Debt Negotiation company sets up a “trust” for you.
You stop making payments on your credit cards and other unsecured debt and that money is deposited into the trust for later payment (albeit it “less” payments – often less than 50% of what was originally due).
A legitimate company will use an FDIC insured company for the trust account and give you access to it.
Credit card accounts typically go into collection after they are charged off, typically 180 days after the last payment on the account and the debt settlement firm will negotiate the balance due down as low as possible – often lower than what a consumer could hope to negotiate on their own.
It is imperative that a consumer desiring debt settlement services use an experienced company that understands all the ins and outs of the process and who will educate the consumer on all of the pros and cons of debt negotiation.