Settlement Authorization

Settlement authorization summary: 

• Before you can complete a debt settlement agreement, you need to say “yes” to a settlement offer. 

• Debt settlement authorization is your permission to a debt settlement program to officially resolve your debt according to the terms of the agreement they reached with your creditor.   

• A reputable debt settlement program won’t charge debt settlement fees or go forward with an agreement until you approve the agreement and they receive your settlement authorization.

Settlement Authorization Definition and Meaning

Settlement authorization is a step in the debt resolution process where you authorize your debt settlement program to finalize the agreement they’ve worked out with your creditor. This is an important part of your debt relief program. 

When you sign up for a debt settlement program, the program negotiates with your creditors for you. If the debt settlement program can come to an agreement with a creditor, you will be asked to review and approve it. Then you’ll provide a settlement authorization, which could be a verbal approval, a digital signature, or a box to check when you log into your debt settlement program online. This step lets your debt settlement program finalize the agreement with your creditor, officially settle your debt, and help you move on with your life. 

Let’s look at how settlement authorization works for debt relief programs, and why it’s an important step to help you get out of debt faster. 

Key Components of a Settlement Authorization 

When you sign up for a professional debt resolution program, your team of negotiators will work with your creditors to try to negotiate debt reduction for you. The goal is to get the creditor to accept less and forgive the rest. Not every creditor will accept a lower payment for your debts. But some creditors might. 

When one of your creditors agrees to negotiate your debts, your debt expert will try to work out an agreement. At Freedom Debt Relief, we have relationships with most major creditors, and we’ve worked with many more. Once an agreement is reached, it’s presented to you for approval. Ideally, the creditor agrees to let you pay less than the full amount you owe. 

For example, let’s say you owe $10,000 of credit card debt and you can’t afford to fully repay it. If your credit card company agrees to accept $5,000 and forgive the rest, this is called a debt settlement. 

If you approve the agreement that’s been worked out with your creditor, your settlement authorization officially says “yes.” 

Settlement Authorization: Comprehensive Breakdown

Here’s a complete look at how a settlement authorization fits into the step-by-step process of a debt settlement program: 

Step 1: Enroll in a debt settlement program. 

Step 2: Contribute money each month to a dedicated account that you control, set up for the purpose of saving money for making offers to your creditors. 

Step 3: Debt experts negotiate with your creditors for you. 

Step 4: When a creditor agrees to settle a debt for less than you owe, your debt settlement program will show you this offer. 

Step 5: If you approve, your creditor is paid from your dedicated account. Some agreements are for a single lump sum payment. Others are for a series of payments. The debt settlement company’s fee is paid from the same account when at least one payment has been sent to your creditor.

Step 6: Payments are automatically sent from your dedicated account to the creditor until the agreement is satisfied.