What is debt settlement and how does it work?

Debt settlement is a strategy for resolving a delinquent credit card debt. It involves negotiating a lower overall balance with the creditor, and having the credit card account closed. This is usually done through a third-party debt settlement company, who will contact the creditor on the consumer’s behalf. The debt settlement company will negotiate with the creditor to lower the amount that the consumer owes. This amount is agreed to by both parties. Once the agreement is made, the consumer pays the debt settlement company the agreed-upon expenditure amount, minus any fees. The debt settlement company then pays the creditor the agreed-upon amount. If the consumer is successful in settling the debt for less than what was originally owed, the credit reporting bureaus will be notified of the amount that was paid. This can have a positive effect on the consumer’s credit score. Debt settlement is not the only way to resolve credit card debt, and the consumer should be sure to research all available options. It may not always be the best strategy, and the consumer should be aware of any fees and other costs associated with the process. While debt settlement can be a valid solution for those who are struggling with credit card debt, it should only be undertaken after careful research and consideration.

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What is debt settlement and how does it work?

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