Let us discuss about debt settlement today. Many people have a false belief that, Debt settlement & the debt consolidation are the same thing but well, this is not true. Debt settlement is entirely different than the debt consolidation loan.
Debt Settlement is also known as Debt negotiation or debt arbitration. It is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.
Suppose you have taken a loan of $ 200,000 from your credit cards to build your own successful real estate empire. But somehow, your business fails and now you can not pay whole of this amount to the credit card company even after going for a Debt Consolidation loan because the loan you have taken is so higher, than the Debt Settlement is the only option for you.
Here either you directly contact your lender to negotiate the term or you can hire the agent who negotiate the terms of debt settlement on your behalf. Now, your lender agrees to settle all the amount if you agree to pay US $ 50,000 as a full payment.
This is debt settlement. But remember that, negotiating your bills is a legal thing but its not the best option all the time. If possible you should not take a debt at all. Debt Settlement is not a good thing for your credit.