Posted on January 27, 2010 at 2:55 am I often hear settle a debt, but what does it mean, what is it exactly? Do I need a lawyer for it? Is it a formal or legal proceeding?

Posted on January 27, 2010 at 6:09 am What does it mean to settle a debt?It means that you and your creditor (or whoever is in possession of your account: could be a collection agency) are agreeing on an amount (which is, most of the time, more or less half of the original amount) & its payment terms & how it reflects on the credit report.

Posted on January 27, 2010 at 6:13 am What does it mean to settle a debt?It could mean that the consumer can no longer pay the balance unless it gets reduced to a significant amount and on a more manageable payment terms - just like what the previous post said.The consumer can do a d.i.y. settlement - with the creditor - if the creditor is aggressive in suing before the 6 months is up - the lawful time to write off the debt - and they usually are the ones giving the terms. Creditors don't usually agree to a settlement because they want to be paid the full amount. But if the creditor pass the account on to a third party collection agency, a settlement is very possible.

Posted on January 27, 2010 at 6:18 am What does it mean to settle a debt?I agree with the previous post - also, the consumer can hire the services of a debt settlement company. The settlement company would negotiate in behalf of the consumer - and therefore reduce collection calls - minimize the chances of a legal action taken against the consumer - get the creditor to consider reporting the settlement as "settled in full" - than just "settled", or "settled for less than the full balance"