For too long, DEBT SETTLEMENT as a form of debt relief has been misunderstood and not utilized bythe many people who could benefit. As of Oct. 17, 2005, the changes in the bankruptcy laws now make it more difficult for people to file for Chapter 7 bankruptcy which would absolve them of all their debts. Now, consumers filing for bankruptcy are subject to a means test to determine if they’re eligible to file for Chapter 7 or if they’ll need to go the Chapter 13 route.

Debt Settlement is a debt relief option designed to prevent someone from having to decalre bankruptcy at all. For those of you who don’t fully understand, here’s how debt settlement works:

1. In essence, debt settlement can help you get out of debt for the least amount of money in the shortest amount of time without filing for bankruptcy.

2. The debt settlement/negotiation company will establish a monthly savings plan that fits your budget based on your total amount of your debt. In addition, the company will negotiate a settlement amount with your creditors, which is often a fraction of the original loan amounts.

3. When you save enough money to completely settle your debt, you write the check and your account is cleared.

4. Enrollment in a debt settlement program does not show up on your credit report however, anytime a creditor goes unpaid, there will be negative marks on your credit report to reflect late or lack of payments.

5. Once your debts are settled, your accounts will show as settled or paid, placing you in a position to rehabilitate and reestablish your credit, remove any errors from your credit report and take the next steps to your financial freedom.

Debt Settlement is often confused with Debt Management aka Consumer Credit Counseling. It’s important to know that the 2 are not the same - Debt Management organizations work closely with credit card companies and consumers to lower the interest rates and consolidate a monthly payment that the consumer makes to the debt management company to disburse amongst the creditors on their behalf.

You must do your due diligence on the debt settlement company you ultimately select. As with everything in life, there are the reputable debt settlement companies as well as the unscrupulous ones. Unfortunately, bad news travels fast and you’re more likely to hear about the negatives of debt settlement than you are of the positives! My choice of Debt Settlement companies is DebtXS and if you’re in the selection of a debt settlement company to work with, be sure to research DebtXS as well as have them be the last call you make in order to arrive at an educated decision. What I like about DebtXS is that they emphasize financial education and teach their clients how to save. This is important as people who come into a debt settlement program inevitably have developed some extremely unworkable and negative money and spending habits that need to be changed.

It’s time for the public to be aware that Debt Settlement is an extremely viable debt relief solution. Is it for you? You will best determine that when you’ve researched your options - just don’t rule it out because you don’t understand it!

Feel free to contact me with your questions at coach@debtfreediva.com
To you becoming DEBT FREE!

Dee Dee Sung
Founder, Debt Free Divas, Inc.
www.debtfreediva.com

This entry was posted on Saturday, January 7th, 2006 at 12:21 pm by Debt Free Diva and is filed under Bankruptcy, Debt Settlement. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.