How to Offer a Debt Reduction Settlement

Debt reduction settlements are used in cases when someone has a large amount of debt that cannot be paid. It is an alternative to declaring bankruptcy that many credit card companies will accept if they think a customer might declare bankruptcy.

Difficulty: Moderate

Instructions

Things You'll Need:

• Debt

1. Figure out the amount of debt that you owe. Is there any way you can pay it back? The best idea is always to pay back your debts, so first assess your financial situation.

2. If there is no way out from under your debt, contact a dept reduction settlement company. These companies offer credit card companies a debt reduction settlement in your behalf. You can find these companies on the web or in the yellow pages.

3. In a debt reduction settlement, you are essentially offering a lower balance than that which you owe. This new balance will be considered "payment in full."

4. Creditors will only accept a debt reduction settlement if they can see you have no other means of paying your debt. If you have a car or home with equity, your offer will be rejected because they will assume you can pay them. Also, if your credit report shows that you have several credit cards open and that you have made payments on those cards, your offer will be refused.

Tips & Warnings

• Always try to manage your debt so that you do not have to consider bankruptcy.

[kkemp]

on 1/27/2009 Excellent advice! 5*'s

[starlet67]

on 1/27/2009 Good,Sound Financial Advice! 5*