Debt Settlement Negotiations - Why Debt Settlement Companies Have Leverage Over Creditors

Online, June 6, 2010 (Newswire.com) - Debt settlement negotiations have grown rapidly in popularity in recent times. Both consumers and small businesses have been negotiating relentlessly to achieve a reduced balance in their unsecured debt in the form of a settlement. While consumers can certainly negotiate a debt settlement deal on their own, studies have found that legitimate debt settlement services are able to provide much more leverage and ultimately negotiate a better deal. So why do debt settlement companies have leverage over creditors when it comes to debt settlement negotiations?

Debt settlement companies have grown in size dramatically since 2005 when bankruptcy laws were passed that made qualifying for bankruptcy very difficult. When the debt settlement companies grew in size so did the amount of unsecured credit card debt that they were negotiating. This is important because when a consumer attempts to negotiate a settlement on their own they are only bringing their own credit card debt to the table. This number is very small, even though it seems large to the consumer, and it doesn't give the credit card companies much of a reason to create a settlement as opposed to taking interest payments.

What a debt settlement company does is pool a large number of their clients credit card debt together and brings million's in unsecured debt to the table during their debt settlement negotiations. A credit card company is much more likely to create a favorable settlement when they know they are going to receive a large amount of money in return.

Whenever a consumer enters into a debt settlement program it is very important that they use a company that is backed by a bankruptcy law firm. This is a huge advantage and creates a lot of leverage over credit card companies. When debt settlement negotiations are under way and a creditor is not giving favorable settlements the attorney informs the creditor that they will flip the consumer to bankruptcy and they will receive far less than if they would if they offered a favorable settlement. With this kind of leverage the consumer has a good tool to avoid bankruptcy achieve financial independence.

Finding legitimate debt settlement companies is not that difficult but consumers must know where to look. It would be wise to utilize a debt relief network that will qualify the companies for you and ensure that they are legitimate and have proven themselves. To locate the top performing debt settlement companies in your state check out the following link:

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