Option #2 Debt Negotiation and Debt Settlement

Debt Negotiation Programs exist for cardholders who cannot afford their required minimum payments and who cannot afford the DMP monthly payment. A person who is enrolled in a Debt Negotiation program is not making monthly payments to the creditors. Instead, they are adding funds to an escrow account on a monthly basis.

These funds are building and are used to pay off debts, one debt at a time. The debt balances are negotiated down to about 50% of the original debt and then paid off. Therefore, a large portion of what the cardholder owes is forgiven. This is called a settlement. Until the cardholder settles all debts, their credit rating does reflect the delinquencies and the cardholder may experience collection calls.

This is the typical experience for anyone who can no longer afford their minimums. The typical Debt Negotiation program length ranges from 18 to 32 months. The Debt Negotiation program is considered the option to choose before filing bankruptcy. It may be the most popular program at this time. If your goal is to pay off your delinquent debt as quickly as possible while saving as much money as possible, this option may be for you.

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