How does the credit card company get paid in a settlement? How are my creditors paid after a settlement agreement is reached?
There are generally only 2 ways to get the money to pay your creditors through a debt settlement plan: Set up a payment plan with your settlement company, or get funds from a friend, relative, home equity loan, or some other such method. Some companies will set up a payment plan for you, sort of like putting money in a savings account and used to pay a settlement with a creditor when enough is saved. This is a good way to establish discipline to save your money to pay your debts and can be automatically debited from your checking or savings account for convenience. The downside to this method is that you have to wait to save up enough money to pay your creditors. Some creditors will not be willing to wait to get all their settlement money and may go after you more aggressively, but more commonly, even these creditors will set up a payment plan for you to pay the settlement amount. The lump sum method is the other way to pay your settlement amount. This way, you have the funds available
