What Kind of Debts Can Be Settled?
Generally speaking, it's possible to negotiate most types of un-secured debt under the right circumstances. If you're not sure what that means, unsecured debts are those that are not tied to any collateral, such as medical bills and credit cards. Secured debts are those that are tied to collateral of some sort, for instance - auto loans are held against the car purchased, and the bank has the ability to foreclose on a mortgage that goes unpaid.
Most Americans have problems with bills from their unsecured debts, due to the highest interest they cost to carry. Here are a few select examples of types of debt that may be negotiable:
- Department store credit cards
- Collection agency debts
- Medical and legal bills
- Old service bills (utilities, etc)
- High-interest credit cards
- Personal loans (unsecured)
It's more difficult (but still possible in some cases) to negotiate what's owed on student loans and tax debts.
If a creditor is willing to negotiate, the debt settlement terms might change immensely depending on the borrowers predicament, and remember that creditors are never obliged to consider settlement proposals at all.
It's most likely for creditors to accept negotiations when they are concerned about the borrower going bankrupt, in which case getting a lessor amount from the debtor is still frequently more than what might be received after a bankruptcy.
