Why Should You Consider Debt Settlement?
One of the biggest reasons to choose a debt settlement is it enables you to avoid bankruptcy. Although there are still some potentially negative consequences for your credit, debt settlement is much less harmful than bankruptcy. Settling your debts is often a better option than filing for bankruptcy, but that depends on your overall financial prospects. If there’s no chance of earning more in the future, then bankruptcy could be better for you.
Filing for bankruptcy is never an easy choice, not only because of the credit consequences, but also because you could lose some of your assets as part of the legal settlement with your creditors in court. Everyone’s financial circumstances are different, so an important part of the process of any solid debt settlement program is discussing your scenario with a debt relief expert to ensure debt settlement truly is the right option for you.
Get Your Debt Collectors And Creditors Off Your Back
Being hunted down by creditors or credit card companies is stressful. Having embarrassing phone calls and letters sent to your house, and sometimes even to your friends and family can make daily life a struggle. When all you want is for your creditors to leave you alone so you can work to pay your bills, a debt settlement program can help, ending the harassing calls and letters and getting you back on track financially.
What Kinds of Debts Are Eligible for Settlement?
Unsecured debts are generally the only debts eligible for settlement. That’s because secured debts are backed by assets that retain value, providing creditors more leverage to get you to pay, but also because they have more to lose by settling your secured debt.
How Does Settlement Compare to Debt Management?
Debt settlement differs from debt management in the sense that settlements clear large amounts of debt at once for less than the balance owed, while management simply rearranges debts to pay them down faster.
Should You Try To Negotiate A Debt Settlement Yourself?
The unfortunate truth is that creditors may refuse to negotiate if you ask for a debt settlement. When it comes down to it, they’re under no obligation to write off your debt for anything less than what you legally owe.
But depending on your circumstances, the certainty of being paid is far more attractive to creditors than the possibility of never being paid at all. Often, creditors will be willing to accept some sort of settlement offer from you if you’re fallen on hard financial times with a low certainty of a fast recovery.
Do Debt Settlement Programs Take Long?
Debt settlement can be one of the best and fastest ways to become debt-free when done correctly. Just remember, the more funds you build up in savings prior to the settlement, the faster the whole process will go to free yourself from debt. Once you contact a settlement company, it’s time to start saving.
Your debt settlement company will negotiate a specific timeframe to clear your debt, typically from three to five years. The biggest benefit is that your debt will not accumulate any more interest charges or late fees after you’ve entered into your debt settlement agreement.
How Long Does Debt Settlement Stay On Your Credit Report?
So how long does debt settlement hurt your credit report? The answer largely depends on your overall credit profile, not just the accounts included in the debt settlement. There are numerous variables involved with any credit score, but in general, debt settlements will stay around for five years.
The good news is, by having your accounts listed on your credit report as settled, there will be a far less negative credit impact than if the debt were to remain unpaid. After your debt settlement, displaying good credit behavior will slowly begin to improve your credit score as your old negative credit history becomes less relevant.
Another important factor to also consider is that if you currently have a high debt-to-income ratio, that may already be preventing you from having credit offered to you, despite whether or not your credit score is currently good. All this means your credit report is a secondary concern when compared with your overall financial picture in the long term.
How Does Debt Settlement Affect Credit Scores?
As soon as you start saving money each month into a separate savings account, you can have a solid position when it comes to negotiating with credit card companies. Having a lump-sum payment to offer provides leverage in your debt settlement company’s negotiations on your behalf with your creditors.
Of course, saving up a lump-sum payment to offer creditors is easier said than done. If you have extra money after paying your bills, you probably wouldn’t be in this situation, right? So how can you get more leverage?
In some cases, it makes sense to temporarily suspend paying creditors to gain a stronger settlement agreement position for better success in settling your debts. Just remember, when you miss payments, those late payments will probably show up on your credit report. So be prepared for a temporary dip in credit scores for an overall better financial position in the end.
If the debt settlement program takes longer due to a lack of sufficient funds for leverage in your debt negotiations, you could run the risk of getting sued by your creditors before the debt settlement is finalized. So be sure you can build up the funds in time before getting started on the program. The best debt settlement companies often offer a litigation option for protection against these situations from arising.
Call Us About Calculating Your Debt Settlement
Debt Negotiations & Settlements
Our talented debt settlement negotiation team will start working on settling your accounts immediately. Once your settlement offers are received, they will be reviewed for accuracy and then presented to you for final approval. We repeat this process until all of your accounts have been settled. Call today and get started!