Debt Negotiation Programs - Why Creditors Of Unsecured Debt Are Agreeing To Debt Settlement Deals

Online, June 21, 2010 (Newswire.com) - Debt negotiation programs have recently become very popular amongst the debt ridden American consumer. Credit card companies and other creditors of unsecured debt are very exposed to incur significant losses from delinquent accounts. Due to the recession and high unemployment rate, many consumers are simply unable to pay back even their minimum monthly payments. When a consumer is on the verge of bankruptcy and their account is delinquent, creditors have no choice but to agree to a debt settlement deal.

When a consumer files for bankruptcy, creditors of unsecured debt usually receive very little of their money back, if any at all. Therefore, if one of their customers is on the verge of bankruptcy it is in the creditor's best interest to make a debt settlement deal . Getting back 50% of their lent money is better than nothing at all. Considering the massive amount of people in debt and the ever increasing delinquency rate, debt settlement deals are expected to continue to increase.

When a consumer enters into a debt negotiation program they must make the independent decision to stop making payments to their creditors. This is a very tough decision but a necessary one if the consumer wants to get a favorable debt settlement deal. Creditors will not engage in debt negotiation unless they believe the consumer is a real candidate for bankruptcy and going delinquent is the best way to convey this.

Instead of making payments to creditors, consumers will pay into a savings account until enough funds are built up to begin the debt negotiation process. The average debt settlement deal in 2009 was negotiated for 50% of the balance however results vary case by case. A lot of it depends on how skillful the debt negotiators are which is why it is very important for consumers to know how to locate legitimate debt negotiation programs .

Getting a debt settlement does not come without consequence. Consumers should know that if they enter a debt negotiation program their credit score will take a hit in the short term. However, after the unsecured debt has been eliminated the consumer will have a much better debt to income ratio and be able to repair their credit much quicker.

Debt settlement is an aggressive debt relief tactic and does not make sense for everyone in debt. Consumers must be experiencing a legitimate financial hardship and have at least $10,000 to qualify for most debt negotiation programs. If consumers are struggling with paying back credit card debt or any other unsecured debts there is legitimate help out there. Debt settlement usually makes financial sense for consumers with over $10k in unsecured debt. There are also other legitimate options available so it would be wise to speak with a debt relief professional.

To talk with a debt relief counselor for free debt help check out the following link:

Legitimate Debt Negotiation Programs