What is debt settlement and how and why it’s fast debt relief for some

After reading the testominals page, still don't understand how these people are getting out of debt in 6 months to 18 months even when the balance is reduced because if they could barely pay on their debt and no savings and then go on your program and now have money to make large monthly payments. Doesn't make sense to me. Could you explain further?

How can a poor working girl in debt who cannot afford her bills get out of debt rapidly by using your program


The CRN member review page is not the best place to start in order to understand how balance reduction through debt settlement worked for those people who comment on that page. In order to fully grasp the what, when, where, why, and how debt settlement worked for each, you would have to start at the beginning, rather than the end of each persons story.

The short answer is that we provide thorough education about debt settlement from beginning to end before our members even really get started. This has proven to be a motivator to get through the process quickly. Our approach to debt relief also shows someone why they may not be suitable for a debt settlement plan. We do this blunt assessment one on one so that all members have a clear understanding of what happens in debt settlement – before it happens.

What follows may be more answer than you were looking for, but I will provide a little more context to the short answer in case you find it of value.

What is debt settlement? This simplest and most blunt answer:

Debt settlement is a race.

People struggling to maintain on time payments to credit cards while still meeting all of their other monthly bills are likely experiencing a monthly cash flow shortage. There are causes to the cash flow crunch, but whatever the reasons are, running out of money before running out of month is the result. When this occurs, there are typically 3 legitimate debt intervention steps to consider:

Debt management plans:

When monthly credit card bills are lowered because the interest rates on the cards are lowered.

Debt settlement plans:

When balances are negotiated lower based on predictable recovery trends and internal policies that vary from one account to the next as well as the collection stage of each account.

Filing bankruptcy:

When debts are discharged is in a chapter 7, or a repayment plan is supervised by the court for either 3 or 5 years (most last 5 years) in a chapter 13.

The stories you read from our members on the blog started out by applying a set of mathematical exercises to determine which option made sense for them. Each persons math will be different from the next. With debt management plans you need to determine if your monthly cash flow can support your paying roughly 2.25 of your total credit card balances on a monthly basis month after month for a period of 4 to 5 years. If that is not enough budget relief, it leaves the 2 remaining intervention steps.

Suitability guidelines for who should attempt to avoid bankruptcy by settling debt as an alternative.

We have loosened some on our suitability warnings due to market realities where banks, assignee debt collectors and debt buyers are willing to reduce balances and provide much longer term payment arrangements along side the reduction. In some cases these term settlement payments are stretched out more than a year, where in the past, payments arrangements were not extended beyond mere months.

Once the risk of debt settlement is fully understood, which include aggressive collection action through lawsuits filed in order to collect; balances that remain unpaid increase; longer negative impacts to credit reports etc., two things generally occur:

1. This type of detail prior to starting a settlement plan weeds out the people who will be better served by filing bankruptcy.

2. Those who are suited to try settlement are motivated to move through the process as rapidly as possible.

People settle credit card debt quickly due mostly to the following:

  • They have access to funds that are remote form creditors in a bankruptcy – loan from family or friend is one of the most common.
  • They can sell items that would be forced to be liquidated in a chapter 7 (and fetch a better price) and use those funds to pay settlements.

I am not sure about your reference to large monthly payments. If I assume what you meant correctly, my response is that anyone involved in a settlement plan has to apply every available dollar to funding deals as they come in so that they can progress rapidly. This reality is not the one painted traditionally by most of the debt settlement industry.

How debt settlement works can depend on how honest it is explained to you by someone you hire:

Debt settlement is typically sold to people who cannot meet their monthly payments. The settlement debt relief option that is offered  by sales people is to estimate half of the monthly minimums that cannot/are not being paid- setting aside that amount over a long period of time – and then settle.

This softer dollar figure is easier for people to sell because it is the payment relief someone struggling needed to hear. This is not how settlement should be represented in our opinion. Settlement is for those who can run a quick race, not a slow one. The race does not have to be run as quickly as it once did, but the messaging should be the same.

I hope this helped make better sense of it. If you have additional questions or comments you can post them below.

If you are serious about learning how you may be able to obtain rapid debt relief – Enroll Now as a CRN Member. Access to our educational tools and specialists will provide all you need to understand about when, why and how debt relief can occur quickly, or at a pace you can meet.


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