Debt Reduction Settlements
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Debt reduction settlements free debtors of overwhelming bills and loans through professional negotiations. Once the process is complete and a payment plan is reached with all creditors, the debtor will attain financial freedom and will hopefully have learned to manage their finances with much more care and with less careless frivolity. The misuse of credit which requires a debt reduction settlement is akin to the root of all evil as expressed in 1 Timothy 6:10: "For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."
The debtor isn't "off the hook" or relieved of paying back their debts through a debt reduction settlement. The arrangement is actually a payment plan to help the debtor take care of repaying their accounts by reducing the balance due in a manner that helps them be successful at that repayment. This technique can work without destroying their credit. It will also satisfy their creditors enough that they will close the account as "paid in full."
Debt elimination tactics are totally different from a debt reduction settlement. The overdue amounts will indeed be eliminated, but not wiped out without repayment of a considerable portion. The amount eliminated is determined within the negotiations. However, the creditor must be satisfied that they are being paid a fair amount while still helping the debtor to likewise fairly settle debts without financial annihilation. A mutually agreeable payment plan can be made to clear the bill and satisfy both parties.
It is important to note that while negotiators are working out the details of debt reduction settlements, that normal payments must be continued by the debtor. Any unpaid amounts only cause the debtor's credit to become increasingly unsatisfactory and will take years to be repaired for future credit consideration. Of course, that could be considered a good thing so that following a debt reduction settlement, debtors will be less likely to obtain new credit and repeat the cycle of indebtedness. But that is definitely NOT the best way to handle the situation - as a hard lesson learned by shackling one's future need for credit.
An experienced professional credit counselor should be the one to negotiate contracts with creditors. Efforts to reduce a full slate of accounts can be difficult if attempted by the common consumer. Debt reduction settlements need to be negotiated carefully in order to accomplish a payment plan that best benefits the debtor. But it also must accommodate the creditors' repayment expectations. Debtors need to get recommendations and check backgrounds in order to hire a reliable negotiator and get on the path to financial relief.
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