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Debt Settlement

Debt settlement is a form of debt relief that has gained more and more attention in recent years. Most people, however, don't completely understand what it is. Even though settlement has been around for a while, and has helped tens of thousands of people regain control of their financial lives, the type of help provided by settlement companies can vary from one company to another.

Watch This Video To Discover How To Pick A Debt Settlement Company

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A settlement service can be particularly helpful when you're experiencing difficulty paying all of your bills. Settlement companies usually focus on helping you with your credit card debt, also known as "unsecured debt."

Debt Settlement

If you were to look at how you pay your bills, you would see that you could break them up into the following categories:

Housing (like your mortgage or rent payments)
Living expenses (like food, utilities, cell phone, gas, etc.)
Secured debt payments (like car payments, student loans, and tax liens)
Unsecured debt payments (like credit cards)

Unsecured credit card debt is where settlement companies will focus their services. By helping you negotiate lower balances than what you owe, a settlement service can help provide you with the debt relief you and your budget need. Here's an example.

Let's say you have the following totals from the categories I've mentioned previously:

Mortgage Payment    $1,250 
Living Expenses    $1,300 
Secured Debt Payments    $ 900 
Unsecured Debt Payments    $ 750 
Total Payments    $4,200

Your total monthly bill payments would be $4,200. Now, as long as you're bringing home at least that much each month, you're OK. But, what if you had some kind of income interruption? Maybe you're bringing home enough now, but there was a time when something happened and your income was uncertain. Maybe you just fell behind and can't catch up. This is now way to live, and there's no reason why you should have to live that kind of financial stress.

In our above example, perhaps after your interview with a settlement company's representative, you conclude that all you can really afford for your unsecured debt is $500 a month. Well, if that monthly amount fits the debt settlement company’s qualification process, then you may be on your way.

By focusing on your unsecured credit card payments, a settlement service may be able to help you create a different payment plan, one that you and the debt settlement company you choose will dictate, NOT your credit card companies.

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