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| Debt Reduction |
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Debt reduction is a process used by both debtors and creditors to negotiate a reduction of
an existing legal debt to a much lesser amount. This process can be otherwise called "Third
Party Debt Negotiation." Legally, it is referred to as an "Offer in Compromise." Any person
owing credit card debt has the legal right to contact and negotiate with the creditors and in this
procedure some may succeed while some may fail to get a fair debt negotiation. A proper and
fair debt reduction requires adequate skills, such as those possessed by the debt counselors at
the Consumer Debt Relief Group, to convince the creditors to reduce the ultimate
debt amount because it would be in their best interest to get something from the borrower instead
of forcing the borrower into bankruptcy. The third party's earning will depend on the amount saved
of the borrower.
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Debt reduction is the better alternative to bankruptcy,
debt consolidation or credit counseling to amicably settle the debts that may arise due to credit card use.
Many people go for bankruptcy which should be avoided because in reality bankruptcy stays on your
credit history for up to ten long years, and will have a negative impact on your attempt to
get employment or a home loan. Bankruptcy can be termed the "ten-year mistake"
because it does not wipe out most mortgages on property, does not wipe out claims
for alimony or child support, does not wipe out debts for substantial purchases made shortly before the bankruptcy filing,
does not wipe out government insured student loans, and does not wipe out some taxes. There are various companies,
like the Consumer Debt Relief Group, which specialize in debt reductions, and their prime purpose
is to assess the financial status of the debtor and inform the creditors accordingly, thus acting as a liaison with the creditors.
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Debt reduction companies should clearly be consulted by debtors in cases where creditors are unduly
harassing debtors. Debt reduction companies usually correspond with creditors on debtors' behalf and
assist debtors by establishing a monthly saving goal so as to start investing only to raise money for the
reduction of the debts. Suppose a person has credit card debt of $30,100. The amount that is to be
payable through the debt reduction program is a monthly amount of $550 for 36 months, thus
making the total amount paid to $18297 which is approximately 60.1% of the original debt.
This figure is much less as compared to other options such as Credit Counseling and the option of making the Minimum Payment.
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As earlier stated debt reduction can almost always be done with proper
negotiation with the creditors. This can be done on a direct basis or by hiring a third party.
It is always a better option to have an expert, like the Consumer Debt Relief Group,
contact the creditors personally rather than trying to do it yourself.
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Debt Consolidation