The consumer in the prior years used their credit card as a method to purchase everything from retail, groceries, airline tickets and everyday living expenses. Debt settlement has become a way for the consumer to unburden themselves from their unsecured credit card debt. However, when the economic climate changed the consumer was not longer able to keep up with their minimum monthly credit card payment.
One of the ways to get relief is to use a debt settlement program. This program is not an easy fix or an overnight miracle for the consumer, this program can take between 12 to 48 months depending on the size of your debt. Basically the debt settlement program works with the consumer to establish a payment plan by which monies are placed monthly into a “trust/escrow account.” When a less half of the monies owed to a lender on your lowest balance credit card, then the debt settlement expert will begin to negotiate on the consumer’s behalf. The monthly payments into the account are normally much less than the current minimum monthly credit card payments. The debt settlement company is usually able to negotiate a 40 to 50 percent reduction of the consumer’s debt.
As a consumer you are asking why, would a lender expect this type of negotiation? The underlying answer is the lenders are more willing to take something against the outstanding debt than to have the consumer file bankruptcy. Normally, when a consumer files bankruptcy, the secured creditors are pay first from the consumer’s assets and the unsecured creditors receive little to nothing from the consumer. It is a win-win for everyone, the consumer and the lender.
