Like in the movies, debt settlement can be like a game of liars’ dice or chicken, where the protagonist and his adversary square off and it’s soon reduced to a matter of who blinks first. Debt settlement is subject to state and federal laws that protect the borrower from dangerous harassment. In some cases, borrowers can get a court injunction, which will force lenders to stop contacting them. Still, at some point you will have to pay up (or live abroad for 7-10 years) in order to establish new credit.
Debt settlement is mainly for unsecured debts
Unsecured debts are debts like credit cards. Student loans and mortgages are secured debts. Because they are legally secured, the federal government often has a direct interest in protecting the lenders. For instance, child alimony payments are secured debt, and you can effectively think of lender as the child, and the federal government as their protector.
Work the system of lender litigators and representatives
Settling debt can often come down to who you finally establish good-faith contact with. Just like those annoying automatized digital recordings you get when you have a problem with a service, many lending reps are programmatic in dealing with debt settlement issues. Find someone who can and will work with you.
You aren’t going to get away with a smack on the wrist
It doesn’t make sense for lenders to lend a hundred thousand dollars, and then simply forgive and forget. If a lender were always easy and conforming during a credit negotiation, they would soon go out of business. If you have $50,000+ in debt, be realistic and know that you will need a long-term repayment strategy.