Debt Settlement

Debt Settlement

Title: Debt Settlement

What is debt settlement?

Debt Settlement is a process to settle your debts with the creditors. With debt settlement, a third party or you yourself negotiate with your creditors to come up with a reduced debt that you agree to pay. The reduction is usually between 30-60% of the total original debt amount.

Attributes of Debt Settlement

Debt Settlement programs gives you a lot of options to clean your debts. It reduces your principal debt amount, eliminates your late fees, lowers your APR, and provides you the flexibility to repay your debts within your chosen time span.

• Principal debt amount: Most debt settlement firms negotiate with your creditors and reduce the principal debt amount you owe. For example, in maximum cases 40-60% of the original debt amount is reduced.
• Late fee charges: Some debt settlement firms waive off your entire late fee charges. It is sometimes seen that late fee charges club to form a major portion of your debt amount. Thus elimination of late fees can save hundred of dollars.
• APR: Some debt settlement programs are done to reduce the high APR's for a particular account. For example, some debt settlement company may notify that APR has been reduced to 8% for the proposals accepted after 10th September 2004 and reduced to 0% for all proposals accepted before 10th September 2004.
• Monthly installments: Debt settlement programs are also determined on the amount you pay on monthly installments. In this process you have to pay a single monthly amount to a debt settlement firm in order to settle your debts. The more you can pay the lesser period of time you take to settle your debt. The amount of your monthly installment is fixed by the debt settlement company based on your present financial status.
• Annual time frame: Debt settlement is also chalked out on the basis of extended time periods. In such cases you have the provision to extend your time period from 2 years to 4 years or sometimes even longer. This is helpful for people who cannot afford to pay at one go.

How long does a debt settlement process take?

A normal credit card debt settlement case might take 3-9 months. If someone wanted to speed up the progress it could be shortened to 1-3 months. Someone wishing to stretch things out could find the time extended to 12-18 months. Some special debt management and debt reduction firms can even lengthen the process to 4 years or more.

How much do these firms usually charge?

Most debt settlement companies are transparent about their fee structure but you are advised to check out if there are any hidden fees involved in the settlement process. On an average the charge of debt reduction firms range from 8%-15% of the total outstanding debt.

For further reference, you can refer to different debt settlement ways athttp://www.debtconsolidationcare.com/settlement-ways.html        

Author Biography:

Jason Holmes is a permanent writer with thehttp://www.debtconsolidationcare.com/ and worked on thehttp://www.debtconsolidationcare.com/debt-settlement.html article She is also a visiting content consultant and writer for other financial sites.