A historical look at a debt settlement program is nothing new for the consumer or for the lenders in regard to unsecured debt. Some type of settlement practice has been in place for over 100 years. The plan may not have been called debt settlement it might have been know as debt relief or debt forgiveness depending on the amount of the settlement.
Debt settlement became an option for some consumer’s during the last recession in late 1980’s and early 1980’s. The only form of relief for a consumer was bankruptcy, debt counseling or debt consolidation. Debt settlement was a little known way for consumer’s to find a way out from unsecured credit card debt.
One question that every consumer asks is, why would a credit card company, be willing to work with a debt settlement company instead of with me the consumer directly? The answer to that question is simply. The debt settlement company has a better understanding of the consumer laws and has experience dealing with the credit card companies.
If you call your credit card company to work out a deal, they typical will work out a payment plan for the whole outstanding balance. Therefore, the consumer is not gaining any ground is trying to get out of debt. Plus the consumer might simply walk away from the debt altogether, by filing bankruptcy then the credit card companies received almost nothing on the outstanding debt. This hurts the financial bottom line of the credit card companies. Therefore, they are more willing to work with a debt settlement company and receive at least 50% or less on the outstanding debt than maybe nothing at all from the consumer.
The phrase, “a bird in hand is better than nothing” can apply to why credit card companies are willing to negotiate with a debt settlement company. It’s a process which requires discipline by the consumer, but it is a better way to handle your outstanding debts, without having to file bankruptcy or doing nothing about your debt.
So take at first step and talk to an experience debt settlement person.
