What is a lump-sum debt settlement and how does it work?

A lump-sum debt settlement is a way of paying off a debt in one payment, instead of making multiple payments over time. Lump-sum debt settlements can be an attractive option for those struggling to repay their debts, as they can often reduce the total amount owed. When a lump-sum debt settlement is accepted by the creditor, the creditor agrees to accept an amount that is less than the total amount of the debt. This total amount is typically much less than the total amount of the debt. In exchange for accepting the lump sum, the creditor agrees to forgive the rest of the debt. The process of negotiating a lump-sum debt settlement can vary from state to state, including in the state of California. Generally, the debtor and creditor will negotiate the amount that will be paid and the creditor will need to accept the settlement. The debt settlement also needs to be approved in writing by the creditor. Once a lump-sum debt settlement is reached, the debtor needs to make the agreed-upon payment. This payment is made directly to the creditor, not to a debt settlement company. Once the agreed-upon amount is paid in full, the debt is considered settled and the creditor is obligated to forgive the remaining balance. Lump-sum debt settlements can be an effective way of paying off a debt. However, it can also be a risky move, as the debtor may not have the money to make the lump-sum payment. It is important to carefully consider all of your options before deciding to pursue a lump-sum debt settlement.

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What is a lump-sum debt settlement and how does it work?

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