It is clear that debt can have a devastating effect on a person’s emotional and psychological well-being and affect many aspects of their lives. You may not be able to enjoy a good meal with your friends, or you might not be able to afford your daily living expenses. Too much debt can ruin your joy in living.
It’s no surprise that many people are looking into bankruptcy options and other alternatives to bankruptcy, given the economic downturn that has affected millions of Americans and homeowners. Debt settlement is an alternative to traditional bankruptcy.
- The best thing about the financial sector is the fact that almost everything can be negotiated. Although you may think that a fixed interest rate or price is the best, there are times when you can get a discount or reduction in fees. It all comes down to who and when to ask.
- In exchange for the forgiveness or a large payment towards existing debts, debt settlement involves offering a large one-time payment. We approach a hospital to offer $20,000. If you owe $30,000 in hospital bills, we will pay the hospital $20,000. The hospital will forgive the $10,000 balance in return for the one-time payment.
What hospital would accept a loss of $10,000? Hospitals often provide services that are not paid for, particularly when patients cannot afford it or aren’t insured. When negotiating, it is important to remember that the hospital is trying to protect its bottom line. Credit card companies and hospitals are unsecured creditors. They cannot seize collateral to repay unpaid balances.
Although it may sound impossible to convince a creditor of settling a balance, it is possible. Although lenders don’t like to advertise settlements, if you are rapidly falling behind in your payments and on the verge of bankruptcy, your lender might be willing to accept any amount they can, giving you one more chance to get on your feet.
Summarized from an article by Kostopoulos Bankruptcy Law.
