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Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. In the U.K. you can appoint an Arbiter or legal entity to negotiate with the creditors. Creditors often accept reduced balances in a final payment and this is called full and final settlement but with debt settlement the reduced amount can be spread over an agreed term. Debt settlement is often confused with debt consolidation or debt management. In debt consolidation and debt management, the consumer makes monthly payments to the debt consolidator, who takes a fee and passes the rest on to the creditors; this way, creditors continue to receive payments each month. In debt settlement, the consumer makes monthly payments, out of which the debt settlement company takes its fees for the legal work or negotiation and payments are paid to the creditor. Unlike U.K. debt management there are no monthly management fees, the debt settlement company may get the creditor to accept a settlement of 40 pence in the pound, but the client pays 50 pence in the pound. The debt settlement company benefit from the extra 10 pence in this case. In the U.K. creditors such as banks, credit card, loan companies and other creditors are already writing off huge amounts of debt. Most creditors are open to negotiations and are willing to accept reductions of 50% or more. Debt settlement allows the public to spread payments out over a set term - instead of having to pay a lump sum in one go which is the case with Full and Final Settlement. Many people are taking advantage of Debt Settlement instead of conventional Debt Management because they have not seen debt management offer the benefits sold to them. U.K. debt settlement is not to be confused with full and final settlement where debt management companies have been known to hold on to client funds in which case the creditors get nothing until they decide to settle. Furthermore, the debt management company usually instructs the consumer not to make any payments to creditors. The intended effect is to scare creditors into settling the debt for less than the full amount. Typically, however, creditors simply begin collection procedures, which can include filing suit against the consumer in court. As long as consumers continue to make minimum monthly payments, creditors will not negotiate a reduced balance. However, when payments stop, balances continue to grow because of late fees and ongoing interest.〔 This practice of holding client funds is regarded as unethical in the U.S. and U.K. U.S. debt settlement differs slightly. There are several indicators that few consumers actually have their debt eliminated by full and final settlement. A survey of U.S. debt settlement companies found that 34.4% of enrollees had 75 percent or more of their debt settled within three years. Data released by the Colorado Attorney General showed that only 11.35 percent of consumers who had enrolled more than three years earlier had all of their debt settled. And when asked to show that most of their customers are better off after debt settlement, industry leaders said that would be an "unrealistic measure." Consumers can arrange their own settlements by using advice found on web sites, hire a lawyer to act for them, or use debt settlement companies.〔 In a New York Times article Cyndi Geerdes, an associate professor at the University of Illinois law school, states "Done correctly, (debt settlement) can absolutely help people". However, stopping payments to creditors as part of a debt settlement plan can reduce a consumer's credit score from 65 to 125 points, with higher impacts on those who were current on their payments prior to enrolling in the program.〔 And missed payments can remain on a consumer's credit report for seven years even after a debt is settled.〔 Some settlement companies may charge a large fee up front, which ignores a rule from the Federal Trade Commission. Or they take a monthly fee from customer bank accounts for their service, possibly reducing the incentive to settle with creditors quickly. One expert advises consumers to look for companies that charge only after a settlement is made, and charge about 20 percent of the amount by which the outstanding balance is reduced.〔 Other experts say debt settlement is a flawed model altogether and should be avoided. == History == As a concept, lenders have been practicing debt settlement for thousands of years.〔(Debt Forgiveness: Plainer Speaking, Please. )〕 However, the business of debt settlement became prominent in America during the late 1980s and early 1990s when bank deregulation, which loosened consumer lending practices, followed by an economic recession placed consumers in financial hardships. With charge-offs (debts written-off by banks) increasing, banks established debt settlement departments staffed with personnel who were authorized to negotiate with defaulted cardholders to reduce the outstanding balances in hopes to recover funds that would otherwise be lost if the cardholder filed for Chapter 7 bankruptcy. Typical settlements ranged between 25% and 65% of the outstanding balance.〔(Testimony of Dr. Robert Manning before the FTC )〕 Alongside the unprecedented spike in personal debt loads, there has been another rather significant (even if criminally under reported) change – the 2005 passage of legislation that dramatically worsened the chances for average Americans to claim Chapter 7 bankruptcy protection. As things stand, should anyone filing for bankruptcy fail to meet the Internal Revenue Service regulated ‘means test’, they would instead be shelved into the Chapter 13 debt restructuring plan. Essentially, Chapter 13 bankruptcies simply tell borrowers that they must pay back some or all of their debts to all unsecured lenders. Repayments under Chapter 13 can range from 1% to 100% of the amounts owed to unsecured creditors, based on the ability of the debtor to pay. Repayment periods are 3 years (for those who earn below the median income) or 5 years (for those above), under court mandated budgets that follow IRS guidelines, and the penalties for failure are more severe. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Debt settlement」の詳細全文を読む スポンサード リンク
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