The process of contacting creditors directly or through a third party and negotiating for a lump sum payoff of your debts is known as debt settlement.

Benefits of debt settlement

• You can reduce your principal debt amount by around 40% to 60%.
• Eliminate your late fees, lower your APR.
• Repay your debts within your chosen time span.

The debts charging higher interest rates are the ones that need to be settled first. This will make the most dramatic change in your monthly budget. Generally a credit card debt settlement case might take up to 3-9 months which can be shortened to 1-3 months if someone wants to speed up the process of settling debts. On an average debt reduction firms generally charges from 8%-15% of the total outstanding debt but is advisable to do a thorough verification of the company.

A certain time period is allowed by a debt settlement company for settling ones debt which is generally 36 months and during this time the creditor needs to agree to on a total amount for negotiation. You need to qualify for the program to use debt settlement to settle your debts. You need to talk to a consultant about your personal debt to see whether you qualify for the program or not. If you do qualify a financial program will be set up to meet your needs whereby you will be able to determine just how much money will be required to put aside every month to start paying off your debts.

Debt settlement is one of the best ways to :

• Improve your credit report.
• Avoid harassment by creditors.
• Make savings for thousands of dollars making a single payment every month and also save a substantial amount of time.

For further reference, you may have a look at the following articles:

1. http://www.debtconsolidationcare.com/debt-settlement.html
2. http://www.debtconsolidationcare.com/settlement-ways.html