Evolution of Debt Settlement
Although many consumers may not be familiar with debt settlement, lenders have been practicing it in one fashion or another for hundreds of years. With pending recession in the late 1980s and early 1990s American consumers started looking at settlement as a viable debt relief option. Before this time their options had been limited to bankruptcy, debt consolidation and consumer credit counseling. Where these previous options have fallen short, consumers found that debt settlement offered greater flexibility and closer matched their financial goals.
As the demand for debt settlement increased so to have the lenders increased their staff to handle it, but this change in providing the service direct from the lender has not always been beneficial to the consumer. Because lenders have only been concerned with the best settlement possible for their bottom line, the consumer has not enjoyed the full potential possible from the service. This allowed for consumer representation, and the debt settlement company and industry were born.
From its inception the debt settlement company was marred with questions of legitimacy by advocates against the practice whom said that the consumer could do it on their own. Yes these advocates were correct, but failed to be entirely truthful. What they did not inform the consumer of is that the settlement they will receive on their own will not be as great if they had contracted a company to represent them in the matter. Also, the advocates never told the consumer that they work for the same lenders they are trying to receive settlements from.
Not withstanding the hurdles set forth by these advocates, the debt settlement industry and program still gained in popularity. The program looks at all of the consumer’s debt and negotiates settlements that can exceed 50% of the original debt and sometimes as high as 60%, and in many cases the consumer is able to be out of debt in less than 2-3 years. This has brought a great advantage over the other debt relief programs where the consumer pays back more than what they owe, and can take more than 5-10 years to become debt free. For this reason and its simple approach to debt, the industry has flourished.
Debt settlement is not without fault though. Sometimes while a consumer is going through the program their credit score can see negative marks along with an increase in creditor calls. However, these effects are not limited to the debt settlement process. Many of the other debt relief options such as bankruptcy and debt consolidation have the same if not greater negative results. The difference is that with settlement you are able to address these negative aspects sooner than you would over another debt relief option.
Even with its negative effects, debt settlement was still able to become a useful debt relief option. It was not because consumers liked or disliked debt consolidation, consumer credit counseling, or bankruptcy, but it was simpler than that. Debt settlement addressed consumer demand for debt relief head on. It did not have a hidden agenda to protect the lenders like the other options did, or take an absorbent number of years to become debt free. Credit scores were affected the same if not more negatively by the other options, and it did not require you to own a home. It simply got people out of debt the way they asked.
From its humble beginnings as a way for lenders to negotiate something back from what a statement said was owed, debt settlement has morphed itself into a viable debt relief solution. No other option has given the consumer the flexibility to lower their monthly out-of-pocket, payback less than they owe, and become debt free in less than 2-3 years. Everyday debt settlement is evolving into an even greater resource for consumers by teaching them not only how to get out of debt, but eventually how they can stay out of debt and build towards their financial futures. This will allow debt settlement growth and success for years to come.
Our Debt Settlement Service
Although we do not offer debt consolidation, we feel it is our responsibility to provide you as much information as possible so to help you make the best debt decision possible. If you feel that debt consolidation is not right for you, take this opportunity to find out more on how our debt program can help you reduce your credit card and unsecured debt monthly out-of-pocket expenses, save you thousands of dollars, and help you become debt free in as little as 24-48 months. Click here for a service overview.