The Benefits of a Full and Final Debt Settlement
A full and final settlement agreement with your creditors might seem a great way of settling your debts to your advantage, but there are also a few negative aspects of this type of arrangement. Nevertheless, it is still one of the better options open to those that owe money to a number of firms, but if you wish to succeed then it is not wise to go it alone. Professional help will pay dividends with this type of debt relief.
Why should that be? Because of the fact that a creditor will be willing to come to a settlement agreement, but they will also want that to be as close as possible to the full amount you owe them. By coming to a settlement, they will avoid the large number of phone calls it might take to persuade you to pay and they will also save the cost of expensive court actions. When they no longer have to harrass you, they can get on with harrassing the next unfortunate in their list.
You will likely find that by this stage you are dealing with a collection agency that has purchased the debt from your original creditor, and they will settle for anything over what they paid for it, but preferably the full amount you owe. If your original creditor is still maintaining contact with you, they will be likely to accept a relatively low offer of settlement - anything down to 20% of what you owe. The reason for that is that they will ultimately sell off your debt to a third party debt collection agency, and will accept from you at least what the collection agency will pay for the debt.
Nevertheless, there are some pros and cons involved in a full and final debt settlement:
Pros and Cons of a Debt Settlement
The pros outweigh the cons by a long way. Here are the pros:
1. The major advantage of this is that you will able to pay off your debt for a good bit less than you owe.
2. The next is that you will have avoided any future interest charges.
3. You will no longer be receiving all these phone calls from your creditors.
4. You will be able to agree with your creditors that they will provide a positive entry in your credit record.
5. Your credit record will be better and you will be able to get more credit if necessary.
6. You will now know what will be facing you if you borrow more tham you can repay.
7. You will feel better within yourself and not wonder what is going to come in tomorrow's post or whether you should leave the phone off the hook again tomorrow.
What that means is that you will no longer owe money, and the telephone calls and letters will all stop - you can then start to rebuild your credit rating from a good standing. However, there is naturally a price to pay for all of this relief. The cons are:
1. You need the money to be able to make your debt settlement payment. A lot of people can't even do that. Your life savings may have to go or you will have to get a second mortgage on your property where your credit record doesn't matter so much.
2. This won't have any effect on your credit record other than the fact that new entries will not be made.
3. There is no legal obligation for your creditors to accept your offer.
How to Arrange a Full and Final Debt Settlement
How do arrange this? It is possible that you can do it yourself, and a few people try to do that. Not many succeed, and of those that do they generally accept a repayment figure considerably higher than a professional negotiator can get for you. The fact is that companies that specilize in debt recovery, and also the collections department of most lending businesses, can tell whether you are an amateur or a professional negotiator, and you have no chance of reaching the same agreement that a professional can.
If you aked them yourself how much they would be willing to accept as a full and final payment, they would probably reduce your debt by 10% - 20%. You will probably accept that with two hands, whereas a professional debt manager would likely regard that as nothing more than an opening gambit not be accepted. That's nothing like the 80% reduction that a pro can get you, although you won't find all debt settlements are as good as that.
You can be sure that your debt will be reduced by 50%. Although no company will offer you any guarantees because some creditors are totally intransigent. Nevertheless, even with them a good professional can often come to an arrangement. A lot is dependent on how many more creditors you owe money to.
However, irrespective of any other consideration, a full and final settlement of your debt means that you no longer owe money, even if you pay back a lot less than owe. That is a significantly better way of dealing with your debts than an IVA or a Scottish protected trust deed. You can regain your self-respect, knowing that you no longer have debts and that you have succeeded in saving money in achieving that.
About the Author
If you have debts and want to make a debt settlement for a sum less than you owe, sometimes as low as 80% less, then visit http://www.writeoffloan.com/debt_settlement/full_and_final.asp where you will find out how you can easily do that.
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