Looking to find out more information about debt settlement? Maybe it’s the debt eliminating service that can finally work for you! Debt settlement is a process in which a company negotiates with your creditors for you in order to reduce your total balances and monthly payments. It is a process that has helped thousands of people become debt free. Here are a few facts:
- Significantly lowers monthly payment – Frequently, the debt negotiators you hire can save you 40% to 60% of what you owe (results vary widely, however). You then only have to pay the new, agreed-upon sum. In most cases this new amount is paid in a lump sum payment with money that you and your debt settlement team have set aside for just this purpose.
Lowest cost to get out debt, while avoiding bankruptcy – If you are using debt settlement in an effort to avoid filing Chapter 7 or Chapter 13 bankruptcy then you probably already known that settling the debt is a much less harsh option. Although your credit will be hit, it won’t be nearly as bad as it would be if you were to file a bankruptcy.
- Speeds up the time to debt freedom – When you sit down to sign the agreement with your debt settlement company they will give you a timeline based upon your current income and debt on how long they believe it will take for you to become debt free. This timeline is typically faster than a bankruptcy or any other type of debt elimination program.
- No upfront fees – Debt settlement companies are not allowed to charge upfront fees. In most cases the fees will be discussed with you before you sign the contract, but the company won’t expect payment from you for any account they settle until after the settlement is finalized. The fees for the settlement will vary depending on the amount of debt and number of lenders that you have. Just like with any legal process, more work calls for more fees.
- Not all debts can be settled – There are some types of debt that are not eligible to be reduced by a debt settlement. Some of these debts include student loans, child support, alimony, back taxes, or any other government debt such as parking tickets or even library fines. Even the best negotiator can’t convince the government to reduce a debt.
Do these facts describe a program you think could potentially help your debt issues? There is no harm in discussing it further with a professional. Call some local debt settlement companies and request a free consultation. Ask them what they could potentially do for your situation, and decide whether or not you think it would be to your benefit.
The Debt Settlement Process
- Look for a reputable debt settlement company
You should conduct a lot of research when looking for a debt settlement company. You should look for reviews of the company you intend to work with. There are lots of websites that offer reviews on debt settlement companies. Past customers also get to share their experiences on these websites. You should also check the number of years the company has been in business. You should also check if the company is law abiding. According to the Federal Trade Commission (FTC), settlement companies should not request for upfront fees. Settlement companies should not pressurize you as well. You should also check the firm’s ratings. Avoid firms that do not plan on how they will handle your debt or firms that do not bother to over your financials with you. Settle on a debt settlement company that has a good reputation in the industry.
- Compare debt settlement fees
You should compare the fees of the various settlement companies. Debt settlement companies are not allowed to charge upfront fees, however, they charge a percentage of the total amount enrolled as debt. The fees range from 18% to 25% of the total debt enrolled.
- Sign up for the debt settlement
After deciding on the company to deal with, the next thing to do is to sign the debt settlement contract. The firm will create an account for you and then you will begin making deposits into that account. You will no longer make payments to your creditors. All payments will be made to the new account and the account will be under your control.
- Negotiate with the creditors
The debt settlement company will then begin to communicate with the creditors when you save a lump sum. They will talk the creditors into accepting an amount that is lower than what you actually owe. If it is successful, you will be cleared of all your debts.
Unfortunately, debt settlement is risky. If it is not successful, you will end up with a lot of debt. You may end up paying more late fees.