Avoid Bankruptcy & Loans, Cutting Debt In Half Is Just Business!

First of all you have to realize that negotiating debt is just business as far as the lending institutions & debt collectors are concerned. They do not have the emotional association with the debts that you have. Approximately 40,000 debts are charged-off every month in the United States alone. While that may seem like a large number to you, it is only a fraction of the amount of debts that continue to be repaid.

Second, your opinion that it’s too good to be true assumes that the lending institutions & debt collectors lose financially when your debts are settled. When a debt is “charged-off” by the original lending institution, that institution receives numerous financial benefits. First, they are able to take a dollar for dollar tax deduction for the total amount of the debt, including the fees & interest charges that have accumulated. So that benefit alone breaks them even financially.

Third, they receive a tax free insurance benefit equal to three to four times the amount of the settled debt.  Finally, they are compensated when they sell the debt to a third party debt collector. The end result being that the original lending institution receives more value when the debt is settled and charged-off than the value they would have received had the debt been paid in full at the time of the charge-off. So now you can see from a business perspective, a lending institution doesn’t think twice but to charge-off the debt & send it to a debt collector.

Now, the third party debt collectors buy the debt from the original lending institution for pennies on the dollar. For example, the debt collector might pay $100 for a $10,000 debt. The debt collectors knowingly & routinely violate Federal laws in an attempt to collect on that debt. When law firms challenge the debt collectors, the debt collectors know that they are caught between a rock & a hard place. If they fight back against companies utilizing law groups, chances are they will incur significant fees whether they win or lose.  So, rather than incur thousands of dollars in law office fees over a debt they paid $100 for, they write the debt off & move on to the next client that does not have a law group negotiating their debts. So again, while it may seem too good to be true, this is happening every day simply as a matter of doing business.