Debt is the real “D word.” We live in a world of credit, which makes it far too easy to fall into a pit of debt without even realizing it. Take, for example, a young couple in their twenties who head to Best Buy for a small, simple purchase. At the checkout counter, they are encouraged to take advantage of a two year interest-free payoff opportunity for the newest iPad using the Best Buy credit card.
Excited at what feels like a free iPad, they go ahead and apply for a credit card they don’t need, buy the iPad they didn’t even want when they walked in the door, and return only a few weeks later to buy a brand new, and totally unnecessary, digital camera, simply because the credit line was there. But three years later, they are struggling to even make the minimum payments on the account, and within a few more months they default and are reported to a credit agency. This is a cycle that repeats itself over and over again for people and couples of all background, ages, and education levels.
With so many Americans trapped under a mound of debt that they can’t seem to escape, debt settlement and debt restructuring have now become two prevalent methods of minimizing the damage and arranging a payoff schedule to get out of debt and back on track. But what is the difference between the two?
About Debt Settlement
With debt settlement, a person drowning in debt has the opportunity to pay off a debt to a creditor, like the Best Buy example above, for a mutually agreed amount that is less than the actual amount owed. This is most common with credit cards and medical bills, because the companies behind those debts would rather receive something than nothing. When the agreed upon settlement figure is paid, the creditor marks the account as paid in full, allowing the debtor to cross one debt off his list and credit score. You’ll also see this in tampa foreclosure defense attorney legal requirements causing debt to be settled.
If this sounds like a great option to you, it’s possible to approach your credit card company or medical establishment on your own and use your best negotiating skills to achieve a settlement figure. However, most debtors prefer to let the “professionals,” known as debt settlement companies, negotiate with the creditors instead, and pay the debt settlement company the money that is required.
The second option can be dangerous, which is why many Tampa bankruptcy lawyers specialize in debt settlement law. If you’re determined to settle your debt and need the help of a middle man to do so, make sure you do extensive research on the company beforehand. If you’ve already been taken advantage of by a scam artist, contact a debt settlement attorney immediately.