Debt Settlement Programs Aide In Economic Recovery

[Jan 23, 2010.]

 

Debt Settlement Programs Are Helping The Economy Recover

For the economy to be healthy again, it needs to grow. To grow, the US consumer needs to be able to spend. Unemployment and reduced income have left many people in desperate need of debt relief and totally unable to spend on even the things they need. Debt settlement programs are providing people with debt relief and allowing them to keep the money they were previously spending on interest. Settled debts look better on a credit report than debts that were abandoned and transferred from collection company to collection company. By allowing consumers to save what they were previously spending on interest and to keep their credit cleaner, debt settlement programs are playing an important role in the future of the economy.

What Is A Debt Settlement Program?

Anytime that you negotiate with your creditor to accept an amount smaller than your actual balance as payment in full, you have settled a debt. There are programs, both government and private, that specialize in this type of creditor negotiation. Such programs have been very important during the recent recession in helping people deal with an overload of debt. Beware, the industry is largely unregulated and some companies do a better job than others when serving clients. Examine carefully any company insisting on money up front. You will likely need to pay something for this service, but it should not be more than what you owe or could negotiate on your own. The debt settlement program should have a very obvious benefit to you to be legitimate.

Debt Settlement Programs Are Better For Creditors

Unlike a Chapter 7 Bankruptcy which usually gives the creditor no money, a debt settlement program gives the creditor some money. Although the balance is reduced, the debt is not a complete write off for the creditor. The loss from writing down the balance can be a hardship for the creditor's profitability. Long term, the credit company's chance of recovering financially with some payment is better than it would be with none. Credit companies provide jobs and contribute tax income to the government. Credit is a necessary part of the American economy. Debt settlement programs provide necessary debt relief for the consumer, while at least partially meeting the needs of credit companies.

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.