Debt Settlement

Debt Settlement, also referred to as Debt Arbitration or Debt Negotiation, is another approach to debt reduction. Straight Credit Counseling specializes in working closely with debt settlement experts, a procedure where creditors agree to a lump sum pay off for a reduced amount in full settlement of a debt. The way it works is by negotiating with a creditor, who agrees to lowering the amount that a debtor owes by settling for a lump sum payment. The creditor then agrees to report to the three credit bureaus that the customer no longer owes them any money. By way of example if a customer owes $12,000, the creditor may accept $6,000 or $7,000 in a lump sum to settle the debt.

How Debt Settlement Works

The amount that you pay is negotiated between you and the lender. This amount is usually the amount that you would have paid on the debt if you had not been charged interest. The lender may extend you the opportunity to pay the debt in three payments or as a lump sum payment. The creditor will indicate on your credit report that you have paid the account, but they will also include that you paid less than initially agreed. Of course this doesn’t look good to creditors, as they will see it as a sign that you are not a good credit risk. Although debt settlement is better than a charged off account, it will continue to appear as a negative account on your credit report, which affects your overall credit score.

Should You Choose Debt Settlement?

While debt settlement will free you from harassing letters and phone calls from collectors, your credit report continues to contain negative information, which means your ability to purchase important things will be greatly limited. The best way to handle debt settlement is trying to work something out with the creditor by asking for the item to be deleted from your credit report. Many creditors agree to this since they don’t really need to keep the information on your report once they’ve been paid. Just make sure to get everything in writing.

We are, as our name implies, Straight Credit Counseling, which means we have the straight answers about clear-cut credit rebuilding strategies that can provide prompt results! If you are ready to improve your credit, the team at Straight Credit Counseling is available to find you the perfect credit counselor. To arrange for a session by phone, please feel free to e-mail us at info@StraightCreditCounseling.com. Contact us today and rest in the knowledge that your bad credit debt will soon be a thing of the past.