What Is Debt Settlement?

Debt Settlement (also referred to as debt negotiation, negotiated debt settlement or sometimes incorrectly called debt consolidation) means that your debt is negotiated down to a reduced amount and paid off in a lump sum. In some rare cases, multiple payments are utilized to pay off the debt, settling the account in full. Settlement is one of the most effective choices available to consumers. It’s a great choice if you have more debt than you can pay off in a 2 – 3 year time frame or are experiencing a financial hardship that has you falling behind (or just about to be) on your monthly payments. Why would creditors choose to settle debts rather than simply charge you interest and late fees over and over again? Well, it’s really a matter of dollars and good sense. Creditors know that if you get into such a bad financial position that you can’t pay your monthly payments, you may decide to declare bankruptcy or simply do nothing. In this case they may get nothing! Therefore, they are usually very willing to settle for a lower amount, given your hardship, than risk getting nothing at all, especially with a bankruptcy among the alternatives.

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Our experienced debt arbitrators have established impeccable relationships with the creditors & collection agencies. Our arbitrators have extensive knowledge in Federal & State consumer laws & exercise the Fair Credit Reporting Act, Fair Credit Billing Act, as well as the Fair Debt Collection Practices Act to help settle your debt.
Your funds will be held at Global Client Solutions, which is an FDIC insured trust account. This account will be opened in your name with you having ultimate control over its funds. The monies collected in this account get disbursed only at the time a negotiation is reached with the creditor and you agree with the settlement offer.
Due to your legitimate financial hardship, you are able to participate in this savings program in order to help pay your debts in the future. We are not here to advise you not to pay your debts now, however if you are able to make payments to your creditors, then you probably don’t actually have a legitimate financial hardship.
In order to enhance the success of the program, we will strongly encourage that all of your qualified creditors enter into the program. Your debt consultant will walk you through all of the program benefits when including all qualified creditors and potential opportunities of leaving out a debt, if that will be in your best interest.
In the worlds of business and finance, solvency is a term that is used to refer to the current level of financial stability associated with a company or individual. The term can also apply to the status of a particular area of finances, such as insurance, cash flow, or property. To be solvent is to be in a position where it is possible to honor all current financial obligations according to the terms and conditions related to each debt, while still having assets left over for other purposes. Insolvency means the inability to pay one’s debts as they fall due and in normal cases it is bad to be insolvent, but when discussing paying taxes on forgiven debt this become a plus. An individual or business that is insolvent will usually have their forgiven debt excluded from their income, thus not being required to pay taxes on it. “A taxpayer is insolvent when his or her total liabilities exceed his or her total assets. The forgiven debt may be excluded as income under the ‘insolvency’ exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent.” – IRS.gov
Bankruptcy is an option that is generally treated as a last resort. It will remain on your credit report for 10 years & you can be denied employment, state licenses, insurance, as well as tenancy of an apartment. Most importantly, you can be denied virtually any type of credit with a bankruptcy on your report. In addition, since the bankruptcy laws have changed recently, it is even more difficult to qualify for Chapter 7, the method of liquidating assets to eliminate your debt. You will not be allowed to discharge alimony, child support, taxes, student loans, judgments, or any loan on the bankruptcy petition. Under Chapter 13 bankruptcy, your debt payments are simply restructured meaning you will still have to pay a percentage of your debts while you suffer the consequences of bankruptcy. Debt settlement is an alternative to bankruptcy.