The Real Truth About Debt Settlement
During recent years debt settlement has increased in popularity over the once popular debt consolidation choice. With debt consolidation you pay every penny you owe to one account, but with debt settlement you can substantially decrease the amount you owe.
Choosing debt settlement can reduce the amount of debt you owe in total. However, there is a downside you should be aware of. Keep reading to find out about some things you should know before deciding if debt settlement is the best option for you.
Debts that are secured by collateral such as a car loan or a mortgage are not typically ideal for debt settlement negotiations. That's because if you fall behind on a secured debt, the creditor can most likely seize the security as repayment (i.e. car repossession or mortgage foreclosure).
And when a debt settlement is successfully negotiated, your credit report will reflect a statement along the lines of "settled less than total balance".
Usually after months, even years of missing creditor payments, the consumer has saved enough funds for the debt negotiator to facilitate a debt settlement. And once the settlement is paid out, your credit report will often reflect something like "settled for less the owed" or something along those lines.
Look at this way, having a debt settlement on your credit report is much better than having a bankruptcy filing on there. That's why it's important to settle all of your debt at one time so that in a few years you have a completely fresh start. Keep in mind, with time, good credit can be established again.
Many consumers choose debt settlement as their debt relief strategy because credit card bills are too high for them to realistically manage with their budget, don't want to make minimum credit card payments for the next 30 - 40 years, and want to avoid filing for bankruptcy protection.
Your very first time attempting to acquire a settlement with a creditor will probably not be successful. It takes time and it takes effort on your part, dragging on for a few years at times. Don't approach the situation expecting to be rid of half your debt in just a week.
The core benefit of successfully negotiating a debt settlement is paying off the debt at a fraction of the balance, in a relatively short period of time. That's the obvious goal. However, there are negative consequences consumers should be aware of prior to engaging in a debt settlement service. As mentioned before, in order to create the appropriate environment for debt settlement negotiations, you have to fall way behind on creditor payments. Otherwise the creditors are not likely to negotiate a settlement. And this has negative consequences.
When is a debt settlement program, it's in you best interest not to discuss anything with debt collectors until you have approximately 40 to 50% of the total debt balance saved. And if you hired a debt settlement service managed by an attorney (highly recommended), then you can forward those calls to your attorney's office.
Despite any of the things discussed here it is still hard to ignore how effective debt settlement can be when facilitated appropriately and ethically.
Since there is a possibility of getting sued from a creditor for non-payment, you want an attorney service that can help you with these civil entanglements. In most cases, given that there is sufficient debt settlement funds set aside, a settlement can be reached and the lawsuit dropped. Essentially, a lawsuit is filed because the creditor wants money, so if you have the funds to make a settlement offer that will usually resolve the situation.
Debt collectors are extremely aggressive in attempting to get a payment from you. Their attempts can be downright ruthless. They will say just about anything to scare you into sending them a payment, and often violate State and Federal consumer protection laws.
Even with all of the things discussed here, you can't ignore the fact that debt settlement can be quite an effective debt relief strategy. Temporary issues on your credit report and dealing with annoying debt collectors can end up saving you a lot of money and that makes it worth it.
Choosing debt settlement can reduce the amount of debt you owe in total. However, there is a downside you should be aware of. Keep reading to find out about some things you should know before deciding if debt settlement is the best option for you.
Debts that are secured by collateral such as a car loan or a mortgage are not typically ideal for debt settlement negotiations. That's because if you fall behind on a secured debt, the creditor can most likely seize the security as repayment (i.e. car repossession or mortgage foreclosure).
And when a debt settlement is successfully negotiated, your credit report will reflect a statement along the lines of "settled less than total balance".
Usually after months, even years of missing creditor payments, the consumer has saved enough funds for the debt negotiator to facilitate a debt settlement. And once the settlement is paid out, your credit report will often reflect something like "settled for less the owed" or something along those lines.
Look at this way, having a debt settlement on your credit report is much better than having a bankruptcy filing on there. That's why it's important to settle all of your debt at one time so that in a few years you have a completely fresh start. Keep in mind, with time, good credit can be established again.
Many consumers choose debt settlement as their debt relief strategy because credit card bills are too high for them to realistically manage with their budget, don't want to make minimum credit card payments for the next 30 - 40 years, and want to avoid filing for bankruptcy protection.
Your very first time attempting to acquire a settlement with a creditor will probably not be successful. It takes time and it takes effort on your part, dragging on for a few years at times. Don't approach the situation expecting to be rid of half your debt in just a week.
The core benefit of successfully negotiating a debt settlement is paying off the debt at a fraction of the balance, in a relatively short period of time. That's the obvious goal. However, there are negative consequences consumers should be aware of prior to engaging in a debt settlement service. As mentioned before, in order to create the appropriate environment for debt settlement negotiations, you have to fall way behind on creditor payments. Otherwise the creditors are not likely to negotiate a settlement. And this has negative consequences.
When is a debt settlement program, it's in you best interest not to discuss anything with debt collectors until you have approximately 40 to 50% of the total debt balance saved. And if you hired a debt settlement service managed by an attorney (highly recommended), then you can forward those calls to your attorney's office.
Despite any of the things discussed here it is still hard to ignore how effective debt settlement can be when facilitated appropriately and ethically.
Since there is a possibility of getting sued from a creditor for non-payment, you want an attorney service that can help you with these civil entanglements. In most cases, given that there is sufficient debt settlement funds set aside, a settlement can be reached and the lawsuit dropped. Essentially, a lawsuit is filed because the creditor wants money, so if you have the funds to make a settlement offer that will usually resolve the situation.
Debt collectors are extremely aggressive in attempting to get a payment from you. Their attempts can be downright ruthless. They will say just about anything to scare you into sending them a payment, and often violate State and Federal consumer protection laws.
Even with all of the things discussed here, you can't ignore the fact that debt settlement can be quite an effective debt relief strategy. Temporary issues on your credit report and dealing with annoying debt collectors can end up saving you a lot of money and that makes it worth it.
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