Debt Settlement Strategy

Few people have a debt settlement strategy, even though debt confronts nearly everyone at some point. Plans are made for children's education, retirement and vacation. Yet often, none are made to account for the one thing that can throw a wrench in the works of all of these--debt. Although the common definition of the word is that of owing money, one intriguing definition describes it as a state of owing. Debt does, in a sense, involve a person in a whole other state of being. It can infiltrate every facet of one's life, affecting physical and mental health and cherished relationships. There ought to be a plan.

Some claim that Americans owe over 2 trillion dollars, and that most of this is from credit cards. Allegedly, the average American household with a credit card owes over $19,000. This seems shocking, but upon reflection it may be a fairly reasonable estimate. At any rate, no one can argue against the fact that debt is a significant part of most people's lives. A debt settlement plan is definitely in order.

At this point it may be useful to consider some terms which are used in books, articles and advertisements for financial services. Many offer a debt settlement strategy, but one needs to consider exactly what is being offered. Debt Consolidation is a term for a method of resolution in which the consumer repays all of the money which has been borrowed. The balances from various creditors are gathered into a single figure and a loan is made for the entire amount, often at a lower interest rate. This is a legitimate strategy, and is useful in that the matter is resolved and the debtor may save money in interest. However, a temptation presented by this process is when the consumer looks at the bills which have been cleared to a zero balance and forgets that the lump sum is still outstanding. He still resides in the state of owing. If this fact is not realized, and the debtor begins to use the recently cleared credit cards for further purchases, he or she will soon be in a worse state than when the process began.

Debt Settlement, on the other hand, is a strategy in which the debtor pays back a certain percentage of the amount owed, and the rest of the money is forgiven by the creditor. The debtor's burden is lessened, and the creditor receives back at least some money from their investment, without further time and money being required for legal proceedings. Although the debtor seems to receive the most favorable advantage, this may be a realistic debt settlement plan for the creditor as well, in some instances. There is an alleged debt settlement plan which is not fit to be considered as such but is actually a scam. This is known as the debt termination scam, or the monetary protest movement. The alleged debt settlement strategy is as follows: The basic idea behind this scam is that you never borrowed any actual money in the first place. Instead, your agreement with the creditor was, in effect, deposited. If a person borrowed against that account, he was essentially borrowing from himself. Since no 'real' money was involved, the debtor's loan should be terminated, without repayment being required. Obviously, this fantasy is based on equal amounts of fraud and wishful thinking and the people who perpetrate this method of settling accounts will generally find themselves the focus of a lawsuit.

In the previous situation, one can not help but be reminded of what the Bible has to say in regard to the matter of borrowing. Psalm 37.21 says, "The wicked borroweth and payeth not again: but the righteous sheweth mercy and giveth." Assuming that the reader is a responsible person who is willing to honor the agreements he or she has made, there is another sort of legitimate and ethical debt settlement strategy that can be employed. The solution is to design and implement one's own debt settlement plan. If this is done, no further consolidation or strategy will be needed, and a person can use such a plan to move permanently from the state of owing. Successful financial plans deal with three things: organization, forethought, and overcoming procrastination. Organization can be as simple as having a place for bills to be stored. Everyone has at some point chased after a bill or invoice that apparently decided to play a vicious game of hide-and-seek at a crucial moment. A basket, box or manila folder is an inexpensive example of a place where these unruly bills can be corralled.

Forethought is important in that decisions need to be made constantly in the shifting focus of events. Time needs to be set aside for paying bills and ensuring that goals are being accomplished. This does not mean that a major financial summit needs to be called. Just pick a time once a week to pay bills. During that time, take a moment to see if there is anything which may be done in a more fruitful manner. Is there a certain behavior which is sabotaging the effort to be debt free? Every account settled is a step toward achieving goals.

Procrastination is the last element which must be dealt with in order to have a successful financial plan. Overcoming procrastination can make the plan succeed or, if ignored, render it ineffectual. Everyone struggles with mundane tasks; it is easy to find plenty of things to do rather than deal with financial matters. A secret in overcoming procrastination is to remember that the dreaded task is seldom as difficult as imagined. If the process is started, one is generally surprised to find that the time and effort expended was much less than anticipated.

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