subject: Steps Followed By Debt Settlement Companies [print this page] Steps Followed By Debt Settlement Companies
Debt settlement is the fastest way and the best option for the debtors to come out of their debts. Debt settlement firms try to figure out a genuine amount that should be paid to the creditors and making their customers debts free. All the companies usually follow the same measure that will be helpful for customers and will lead to successful debt settlement. These companies charge money for their services but they also help you save the debts about 50 to 60 %. The fees you pay might be charged will be about 15-20 % of the total debt. It is also important to know that the settlement is done for the unsecured debts. You must not be aware by the working of these companies.
The first step that is followed by these debt settlement companies is that they advise their customers not to pay the monthly bills to the creditor and submit their money in settlement company account. Once the debt amount will increase, creditors will call the debtors to inform them about the same. At this point the debt settlement companies intervene and start paying from their account. They will try to figure out the settlement with the creditors. They will make realize the creditors that the debtor is not in the condition to pay their debt anymore and ask the creditors to reduce the debt amount. After the settlement money is decided the amount is paid at once or in two three installments. The debts that cannot be negotiated with the debt settlement process are car loans, student loan, tax debts, and child maintenance and that can be negotiated are the unsecured debts.
The fees of the company depends on how much the debts are due, usually the companies take out their fees from the debts saved and it is about 25 to 30 percent. Once the debt settlement amount is paid, the debtor is no longer due to pay any money to the creditors. In some situations creditors might demand for the remaining money according to the agreement. The debt settlement process not exempt you from the income tax as the money saved in the settlement are counted as your income and you have to pay for it. In some cases the debtor is considered insolvent that you due money is more than the income. The debt settlement process is a fast process and might be end in 2 years or maximum of 4 years depending on the debts amount.
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