Debt settlement occurs when the debtor agrees to pay the creditor less than what they owe.  This is an option only after the debtor has stopped making monthly payments and cannot afford to pay what they owe due to financial hardship. Other options are available but debt settlement is the better option if dealing with unsecured accounts.  A credit card account that has been settled will remain on your credit report for several years. The process takes an estimate of twelve to thirty-six months.  There are companies that offer assistance in debt settlement for a nominal fee, Vivix Credit Solutions for example.

Credit card, hospital, medical, and personal loans are debts that are unsecured.  When a payment is behind three or more months, the creditors then realize they will not receive any payments from the debtor.  Their next option is to offer a settlement on the account, possibly 30 – 75% of the account.  Many creditors ask for a higher percentage of the account.  During the time the payments have stopped, the debtor begins to save money to settle the debt with the creditor.  Once the debtor accumulates a fair amount of money, then negotiations may begin with the creditors says the professional of Vivix Credit Solutions. Many creditors prefer to collect part of the debt than to not receive any amount.  For this reason, many creditors are willing to work with the debtor to guarantee repayment of the loan.

Hiring a financial company that deals with debt settlement is an easier and less stressful way to approach the situation.  The party must make sure the company they choose to hire is accredited with the Better Business Bureau to feel secure with entrusting them with all their personal information.  Certified counselors are well experienced with debt settlements.  Once a company is hired, they will handle the harassing calls from creditors who attempt to collect the debt.  The counselors will be the ones to negotiate with the creditors.  The process of debt settlement can be handled by an individual but is less stressful if a Certified Counselor can assist in the process.

In the past, providers of debt settlement cases were accused of working unethically.  In 2010 an act known as the Debt Settlement Consumer Protection Act was enacted to prohibit many of the unethical acts previously practiced to abuse consumers.  The enforcement powers of state and federal agencies were strengthened and there are written disclosures making consumers aware of their rights.  Consumers are more aware of the proper process of settling a debt.

The final step in settling the debt is to have an agreement of the document between the debtor and creditor.  Once the terms have been agreed on, each party is then released of any responsibility from the original loan.  The parties must make sure all settlement agreements are in writing.  After the debt has been paid, check the credit report to make sure the negative information has been properly removed.  If the information is still present then dispute it with the credit bureau.  Debt settlement might not work for everyone cautions the experts at Vivix Credit Solutions but it is a great option in settling debts and removing negative information from your credit report.