Imagine you owned a business:
A customer owed you $1,000 from buying on credit with your store... and then that person lost their job and hasn't been making their payments. So you're like "dang I'm probably not gonna get paid anything" but they came to you and say, "look I don't have $1000, but I want to make good on my word. If I paid you $500 would you forgive the rest?"
So you say, "Yeah I was expecting $0, so I'll settle for $500."
That's a debt settlement.
In the analogy, your business is usually a credit card company, and the customer is you. You've bought things on credit, haven't been making payments, and don't have means to repay... so in a settlement the credit card company agrees to forgiving the debt if you'll pay some agreed upon amount (less than the full amount owed).
If you've been making your payments (like you should), and have the ability to continue making further payments, the company likely won't settle. It's only for people who they are likely to get nothing from.
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06-01-2010, 08:41 AM
