Chapter 5

Funding Settlements

The single most important factor in the success or failure of any settlement program is the availability of funds for settlements. The most common question I am asked when I explain debt settlement to people is, “If I can’t pay the monthly payments on my accounts, how am I going to be able to come up with funds for settlements?” This is a good question.

          Like many things in life, credit and debt are a game. The game is heavily rigged in favor of the banks and finance companies you borrow money from. The reason it’s rigged that way is somewhat justified. Lenders take a risk every time they make a loan. They may not get paid back. To state the obvious, banks and finance companies have something we, the consumers, need or want quite a bit—money. They agree to lend you money by giving you a loan or a credit card if you promise to pay according to the terms they set forth in their contracts. If you don’t agree, they won’t give you the money—it’s pretty simple. He who has the money makes the rules. The terms of the agreement require you to pay back a specific amount of money per month. The money you pay is divided between the interest on the money you borrowed and the principal balance on the debt. (The principal is the amount of money you actually borrowed or charged on your credit card.) This “game” seems to work out pretty well for you as long as you are able to make the payments. You get to buy houses, cars, and other goods and services that you would not otherwise be able to buy if you had to pay for the purchases in full with cash. It doesn’t work so well for you if you can no longer afford those payments due to some life event creating a financial hardship for you.

          What many people don’t realize is that such a financial hardship can shift  the  “balance of power”  as it relates to your  interaction  with