Do you remember what it was like back in October 2008? That’s when the financial crisis rocked the world and we all collectively held our breaths and waited to see if the entire banking sector would collapse. From my own perspective, it had pretty much been “business as usual” in the world of debt settlement up to that point. And then the whole world froze for about two weeks. I had just started to wonder about what the future would hold for my own business. And then the dam burst wide open.

Starting around mid-October 2008, the phone started ringing off the hook, and I could barely keep up with the flow of inquiries. The tidal wave continued all throughout 2009. The way I explain it now, with the benefit of more than a year of hindsight, is that I was already “surfing in the ocean of debt,” and had been doing so for many years. After the financial crisis unfolded, a giant tsunami rolled up right underneath me, so I just kept surfing! The banks were seeing default rates double, triple, and even quadruple in some cases compared to “normal” times, and that spike in the number of financially distressed consumers was reflected in the volume of settlement activity.

Long story short: 2009 was a *very* good year to settle unsecured debts. Virtually every major creditor was accepting settlements at figures at or below the thresholds I had been seeing previously, and many consumers therefore did better than expected with their settlements. I don’t mean to imply that it was “easy” to settle with creditors last year. It still required determination, patience, persistence – and, of course, a really good coach! 🙂

That said, it was certainly less difficult for many consumers to achieve settlements than it would have been prior to the financial meltdown. Bear in mind that none of this had anything to do with the bank “bailouts,” TARP, or any of the other emergency measures taken by the Federal Reserve or the Treasury Department. The banks are agreeing to settlements simply because it’s in their own best interests to do so. They don’t settle for less than the full balance out of altruism, or any sort of desire to actually help people. They do it to *survive*. Settlements are what creditors do in order to reduce their losses (before charge-off), or to recover against losses already booked (after charge-off).

So due to the economic recession, 2009 was certainly a banner year for settling debts. How about 2010? As I write this post at the end of February, I can say with confidence that 2010 will also be a very good year for settlements. ZipDebt clients have reported settlement activity that represents more than $1.8 million of forgiven debt, and that figure is only the total for January and February to date. In other words, it’s still “business as usual” with all of the major creditors, just a whole lot more of it than in “normal” economic times when default rates are below 5% (rather than above 10% the way they are today).

If you are facing a credit card debt burden that you simply cannot sustain anymore, and you’re starting to worry that your situation will lead to bankruptcy, take the time to check into debt settlement as a potential solution. It’s not the right strategy for everybody with a debt problem, but if you’re a good candidate for this approach, it works like magic.

If you do decide on debt settlement as your strategy of choice, steer clear of the third-party debt companies that just want your fee money up front. Nowadays, settlement negotiations are an extremely common thing, and there is absolutely no reason to pay thousands of dollars in “fees” to some rip-off company who will not perform as advertised. You CAN learn to negotiate and settle your own debts. All that’s needed is a little training and coaching, and here at ZipDebt, that’s what we do best.