Will Creditors Accept Debt Settlement?

By Author: J.J. Yong
Total Articles: 963
Comment this article

Debt settlement is different from debt consolidation. It is one type of financial solution that involves negotiating a lesser pay off amount to resolve the outstanding balances owed to the creditors. In fact, it is a good attempt for debtors to regain financial freedom. However, is this concept a well accepted alternative to the creditors?

Frankly speaking, for creditors or debt collection agencies, their main purpose of solving debt issues with their clients is collecting the debts owed. They don't have the intention to threaten or abuse the debtors in order to obtain more collection. In normal circumstances, when debtors offer cash settlement at a reasonable amount (30%-40% of total outstanding balance), the creditors are willing to accept the offer. This is because they can still get back some money from their debtors rather than if they charge off the accounts to become bad debts or they sue their debtors for bankruptcy. If they do so, they will never get back any single cent of their money.

On the other hand, some of the creditors do not really agree with debt settlement as they find that they are at the losing ...
... side. They may switch from this plan to a payment plan where they agree to reduce the interest rate or eliminate penalties with the condition that the debtors must pay their principal debt in full.

To sum up, debt settlement may not be mutually agreed by both debtors and creditors. As a result, a proper debt negotiation should be carried out in order to have a win-win situation between both parties.
For more information about debt settlement letter and debt settlement companies, visit DebtSettlementEssentials.com.