Casetrackerlaw – Settlements Information
A debt settlement is a financial strategy in which a debtor negotiates with a creditor to pay a reduced amount that is considered full payment for the outstanding debt. This process is often used by individuals or businesses facing significant financial challenges who cannot repay their debt in full. Here’s how debt settlement typically works: Negotiation : The debtor or a debt settlement company contacts the creditor to propose a settlement. The debtor offers to pay a lump sum less than the total amount owed. Agreement : If the creditor agrees to the settlement offer, they accept the reduced amount as full payment, and the debt is considered settled. Payment : The debtor pays the agreed-upon amount in one payment or over a short period. Impact on Credit : Debt settlement can negatively impact the debtor's credit score because it often involves paying less than the full amount owed and may require stopping payments to the creditor duri