Steinberg Legal Services - Debt Settlement Experts
It’s all a too familiar story for many. Two or three credit cards with huge bills. You have just lost your job and unemployment insurance barely covers your food bills. You simply do not have the ability to pay your credit card bills and don’t know what to do. There are only a few options left. Bankruptcy or some type of negotiation with your creditors. Your future credit options seem bleak and you want to cry.Bankruptcy seems easy enough but has severe repercussions. It even costs money. Yes that’s right even going bankrupt will cost you money from the little you still have. The other option has become much more popular of late. That is negotiating with creditors and cutting a deal for a write off on a major part of the debt. How does this all work? Why would the credit card companies agree to a less than complete payment of money it is owed? The answer to that question lies in the fundamental dilemma that these creditors have. They of course would like to collect the entire sum of money but are liable to collect nothing at all if the person who owes all this money declares bankruptcy. That is the so called threat that can be used to convince a company to take less. Typically these deals are cut very quickly with the creditors who receive a guaranteed chunk of money and in return write off the rest of the debt. These companies prefer this model to others as they do receive some of their money and almost always the late fees make up a large amount of the bill. They often get back at least the original sum they shelled out, sometimes even more. For the creditor it’s as no brainer as they pay less and remove the weight of these creditors from their shoulders. There credit rating is bad but would have been worse had they declared bankruptcy. This debt settlement phenomena has become a very common option for very many . Desperate people are hiring law firms to mitigate their financial woes. A typical situation could be a collective debt of $90,000 that the credit card companies agree to take 30 cents on each dollar. They except $27,000 and write off $63,000. This $27,000 is usually directly sent to the credit card company while a lawyer could take $3,000 fo r the negotiations . When this is all over a full 2/3 of the debt has been written of and unbelievable as it may seem everybody is happy. The many who saved himself $60,000 is ecstatic and the creditors are happy to get something before they get nothing. The debt settlement expert is happy because he makes a commission. Some look down at this type of arrangement but it is very popular and by the looks of things will be needed for a while
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