If you have already planned of negotiating a debt settlement, you must be aware of the financial trouble which are associated with bankruptcy filing! You can try your luck on bankruptcy alternatives with debt settlement. The method of settlement has overthrown the traditional method of bankruptcy because of a number of reasons.
Firstly, settlement does not take as much time as bankruptcy.
Secondly, the financial troubles which are associated with bankruptcy are eliminated in settlement. A person regains credibility after settlement is over which is not possible in case of bankruptcy.
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Thirdly, there are no legal hassle related with settlement. In bankruptcy, a person has to be in touch with the attorneys continuously which is not required in settlement.
Finally, there is no credit counseling session in the method of settlement. People need to go for credit counseling in case they opt for bankruptcy. They will be judged by the counselors appointed by law who will analyze the situation of a consumer on the basis of the income levels and the expenditure habits. In case the counselors think that the consumer is in a position to repay the debts either completely or partially, the consumer will not be allowed to file for bankruptcy.
On the contrary, a person will only have to have an overall consolidated debt of $10k or more in order to opt for settlement. The debt has to be consolidated in one place to minimize the time and cost of settlement. The person is advised to hire a professional settlement company to get the best results. The negotiator from the company will advise the consumer to go delinquent in order to prove that the consumer is in financial crisis. The consumer when stops paying, the creditor waits for 12-16 weeks and then sells off the debt to a collection agency for 20-30 cents on each dollar. The negotiator then contacts the creditor with a deal of 30-50 cents on the dollar. The creditor agrees to the deal because it means 100% ROI for the collection agency and eliminates the debt of the consumer by at least 50%. This is how a person can negotiate a debt settlement.
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