When looking for a debt settlement service, some people ask themselves when seeing such a program, "why does this seem too good to be true?" But the funny thing about this is the company is not too good to be true, the program does exist and is very practical in comparison to the alternatives of bankruptcy for both the person in debt, and the company in which the debt is owed too.
To better understand the realities of debt settlement you need to understand exactly what settlement is, what the settlement plan can do for you, along with why companies are so willing to compromise to avoid the person in debt claiming bankruptcy.
What is a settlement of debt? A debt settlement is a process in which a person who owes a significant amount of debt the person cannot pay off as it stands makes a compromise with the company in which they are in debt, to settle the debt at a reduced total cost to prevent a customer from claiming bankruptcy.
A person can either discuss settlements with the company on their own, or they can hire a 3rd party company to discuss the debt with the company owed for them.
When looking into whether it is more beneficial to simply discuss this process on your own or whether to use a professional speaking on your behalf you need to understand a professional is trained to know exactly what to say and what to do to get you the highest discount on your debt possible.
Thus using a 3rd party representative would seem like the optimal thing to do when it comes to saving money.
Why do companies offer to provide settlements of debt? Companies such as credit card companies will settle debts at less than the actual amount owed due to the ramifications of bankruptcy.
If a customer is faced with bankruptcy and files successfully, the debt owed to the companies which that person cannot pay, are then nullified and those companies will not see the payments at all.
By providing a discount the company is at least receiving some form of payment in comparison to no payment at all.