Debt settlement is a method of handling debts which seeks to reduce one’s debts by getting creditors to accept less than the full principal balance.

How long will a debt settlement program take?

This can also vary. A debt settlement company will consider many factors when determining the length of your program. Some factors include: total amount of debt, number of creditors owed and availability of funds to be used for settlements. Typically programs take at least 18 months, and seldom take more than 5 years. This time frame may sound overwhelming, but it will take less time than if you were to pay off the debt on your own.
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Will all of my debt be reduced when I finish the debt settlement program?

Generally, if you complete a debt settlement program, all of the debts you chose to include in the program will be resolved with zero balances at the end of the program. Generally, debt settlement companies only take unsecured consumer debt, such as credit card debt, personal loans, lines of credit, medical bills, etc. Most debt settlement companies do not handle secured debts, such as automobile loans and home mortgages. With this type of debt, the lender could repossess the automobile or the home if the payments are not made. Also, debt settlement companies usually do not take debts for child support, alimony, taxes, or student loans. It is important to understand that in order to successfully complete a debt settlement program requires both mental and financial commitments over a period of time.
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How do the debt settlement companies determine a client’s suitability for their program?

Most companies will conduct a budget analysis, free of charge, to determine whether or not debt settlement is the best route for you to take. It is important when choosing a debt solution that you consider every option. The more suitable you are for the program, the more likely you are to successfully complete it.
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How does your credit card debt settlement program work?

When you enroll in our debt settlement program, we set you up on a monthly payment that is as much as 50% lower than your current minimum monthly payment. In the meantime, we negotiate with the credit companies to get them to agree to substantially lower the amount you owe. Once you have saved enough money and a creditor has agreed to a pay off (normally 40 to 50 percent of what is owed), we pay off the credit card company with a lump sum settlement.
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Does your debt settlement service deal with debts other than credit cards?

Yes, we are also able to deal with medical bills, personal loans, repossessions, department store cards, gas cards, and accounts in collections. Since we negotiate with your creditors, we are unable to work with mortgages and cars because they will be able to recover the property in the event that you do not pay according to the terms they stipulate. Student loans also might as well be considered "secured debts" because the federal government will allow a student loan creditor to take your tax refund or levy your bank account without a judgment if you default. Since the bankruptcy law changes in 2005, even private student loans cannot be discharged in a bankruptcy. In sum, we only deal with debts where we will have sufficient leverage in order to procure the lowest debt settlement possible.
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How will your credit card debt settlement program affect my credit?

The impact of credit card debt settlement on your credit depends mostly on what your credit is like now. If your credit is good now (700s), then credit card debt settlement will have a negative effect on your credit, particularly while you are in the program. For consumers who have already fallen well behind, it is probable that credit card debt settlement may impact your credit positively by paying off the accounts. Your FICO credit score is primarily based on your credit history (35% of your score) and the amount you owe (30% of your score). In a credit card debt settlement program, your credit history is affected negatively and the amount you owe is affected positively.
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