You’re falling behind on your payments and the pressure is mounting. Perhaps your creditors have started to call and to harass you (although this is not legal) and you wake up with a knot in your stomach most mornings. If this scenario is similar to the one that you’re in, you will know that having looming debt can color every hour of your day. You are nervous when the phone rings and all those unpaid bills arriving in the mail just make your stomach hurt even more. Perhaps you’re feeling that there’s no way out and that you will never have peace of mind again.
Actually, you’re not alone in your anxiety. New York City has many people who are struggling financially and who are looking at debt settlement programs in New York City area. There are companies in the city that you can consult with which will be familiar with the situation you’re in, as they’ve handled many cases before. Best of all, they’ll be able to help you to get out of your debt trap and to live a life which is far less anxious.
How does debt settlement work?
When you owe a creditor a certain amount of money and are paying it back in installments with interest, it’s possible to negotiate with the creditor that you pay back the debt in a lump sum, and that the amount you pay is greatly reduced. There are different ways to do this. You could, for example, save up so that you have a specific amount of money available to settle your debt. It would depend on the negotiation skills employed, but some people can get their debt reduced by as much as 50% by paying it off in one lump sum.
If you think about how creditors operate, they are charging you interest on your outstanding debt, exactly as a bank would. By paying the debt in full, you should not be charged any further interest (which has already been calculated into your monthly installments). Further, the creditor no longer has to send you invoices and statements and doesn’t need to employ staff to follow-up on your debt, so all this would be something you would discuss in order to reduce the total amount outstanding.
On the other hand, you could work through a reputable company that provides debt relief. You could deposit money on a monthly basis into an escrow account this company sets up, which would in turn negotiate with your creditors on your behalf. The fact that you are paying into an account each month gives your creditors confidence, and gives your financial counselor leverage to arrange for a reduction of your debt.