Debt Settlement - Some Believe Debt Settlement Filings Will Outpace Bankruptcy In 2010

April 23, 2010 – Debt Settlement has been referred to some as a loophole in the banking system. This is because consumers are able to legally eliminate debt while avoiding the traditional method of filing bankruptcy. This is not for everyone and only those with a legitimate financial hardship will qualify. Most consumers can expect to eliminate at least 50% of their unsecured debt when they opt for debt settlement. With tougher bankruptcy laws in place many experts believe debt settlement filings will outpace bankruptcy in 2010.

Debt settlement has been around for over 10 years but it has never been so financially advantageous for consumers who are at least $10,000 in unsecured debt. It is not only consumers that are struggling with debt, but also the majority of creditors are also struggling. Creditors of unsecured debt are especially concerned. This includes credit card companies, medical institutions, and other creditors that issue credit with no tangible asset backing it up. If a consumer defaults on their unsecured debt there is really nothing that they can do about it. This is why creditors are willing to settle a delinquent balance for as little as 20 cents on the dollar.

If the debtor declares bankruptcy the creditor will likely receive nothing. To avoid this situation creditors of unsecured debt are making debt settlement deals. But in order to receive a generous debt settlement and eliminate at least 50% of the unsecured debt a consumer has to prove they are unable to make payments. The easiest way to do this is to stop paying the creditors and go delinquent. This is a tough decision to stop paying creditors but it is truly the only way to gain leverage and negotiate a debt settlement deal. FreeDebtReductionHelp.com will help consumers with the best ways to start the debt settlement process.

Debt settlement companies know how to exploit this loophole in the banking system and negotiate at least a 50% debt elimination deal. They have skilled negotiators that know exactly how far they can push creditors to get them to agree to debt settlement deals. After 90-120 days credit card companies will sell the debt to a collection agency for 20-30 cents on the dollar. After this happens, the debt negotiators come in and are able to offer a deal of 40 cents on the dollar which would be 100% ROI for the collection agency and at the same time result in a 60% savings for the consumer. This is essentially how debt settlement is able to work.

After a consumer has chosen a legitimate debt settlement company to do business with and made the decision to stop paying creditors they will begin paying into a savings account and building up funds to give the negotiators leverage during negotiation. Most debt settlement programs last 2-4 years and after that the consumer is completely debt free. This is a much better alternative than continuing to pay on massive credit card debt balances which could take the rest of one’s life to pay off.

Credit card companies will be more than happy to collect interest on the debt balance for the duration of a consumer’s life. This is how they make their money and credit cards have considerably higher interest rates than most other forms of borrowing. If a consumer has over $10k in unsecured debt it may be a wise financial decision to consider debt settlement and avoid bankruptcy. While credit scores will be negatively impacted at least initially, this is a much better alternative than continuing to pay the minimum payments on credit card debt for the duration of one’s lifetime.

To locate legitimate debt settlement services that are certified members of The Association of Settlement Companies (TASC) check out the following link or call 877-853-6466:

www.freedebtreductionhelp.com

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