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Debt Settlement - Do You Need a Debt Settlement Company?


What is debt settlement? Debt settlement is the process of negotiating down a debt with your creditors. This can be done either directly, through collection agencies and/or with a law firm that specialize in debt collection.


One of the most critical aspects of debt settlement is the "settlement letter." If you call your creditors and ask for a reduction of the debt you owe, they might say, "sure we'll take $.30 cents on the dollar for your balance." You make the payment as discussed, and exhale a sigh of relief that this is now over and you can move on. However, you have nothing to prove that this debt reduction ever took place.

So, six or seven months later, you get a call from a collection agency stating that you still owe a balance on the original debt. When you try to explain about the agreement you made with the creditor, they tell you that you will need to prove it. You have no proof.

The "debt settlement letter" is the key to the debt settlement process. A word of caution if you want to try to do the debt negotiation on your own. Most creditors will not send you a settlement letter in advance. If they say they will not send the letter before payment, DO NOT accept the settlement offer. Let a professional debt relief company get you the debt help that you deserve!

Whenever a debt is negotiated, the company should demand a letter from the creditor detailing the terms of the settlement, and this should include entering a zero $0.00 balance on your credit report. Creditors have up to 60 days to report this to the 3 credit bureaus. You also want to make sure you get the original letter for your files. This will protect you from getting hounded from collection agencies in the future. If you are contacted, you will have the proof you need that the debt no longer exists, and they won't bother you anymore. A settlement letter has been proven to stand up in a court of law.

There are not many creditors or collection agencies that do it this way, so it is important to do some research before hiring a company to negotiate for you. The last thing you want is to have a false sense of security that you are debt free.

A legitimate settlement company can often reduce your debt by 60% or more. In fact, if you use the right company, you can be paid up in three (3) years or less and this can all be behind you.

John A. Henry is a writer for Nationwide Debt Reduction, Inc., which is the largest Christian Debt Settlement company, and has helped 100's of thousands of individuals, families and small businesses become debt free. Download their free report on Debt Settlement at




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