Do you have an outstanding credit card bill? Do you have a hard time making the minimum payments each month? If so, you are likely in need of debt relief. With the economy in the midst of another recession-like meltdown, more and more families are facing a difficult financial plight. At the same time, creditors you trust and rely on are calling, sending out mail, and in some cases, calling you up in order to collect on their debts. So how do you know where to turn next?
One of your options is getting in touch with your creditors. Most often, they will offer a settlement for a portion of the original bill in order to get the account closed. You may be able to get a lower payment (a percentage) to pay off the whole debt. Settlements similar to this are oftentimes referred to as debt negotiation or debt consolidation. The downside of this plan is that you will incur a small extra fee. Sounds like a good deal, right? Before you agree to anything you will need to familiarize yourself with some key points.
o Debt settlement is actually an agreement between you and your creditors. They agree to accept only a percentage of your debt and forgive the rest. You must have a considerable sum of money to be able to get your debt settled. Creditors will frequently agree to take as little as twenty-five percent of your total debt if it means that they will get their money faster. If you don’t have that amount of money, you don’t want to get involved with a settlement program.
o While you can work with an agency to help you settle your debts, you are likely to come away with a lower discount. Once more, you don’t want to agree to something that you are unable to pay for; you will be sent a note in the mail about your inability to pay and your creditors may then report your action to the credit bureaus.
o A creditor isn’t obligated to accept your terms; you simply need the terms to help you pay off your debt quicker. If you have the money and you can pay the settlement immediately, the creditor may not be willing to help you.
o By the time you are involved with a settlement company and agree to a settlement, you will be asked to stop making payments to your credit cards. You will also be asked to put the money you have in an account each month. Giving you an additional source of debt relief. While you may not want to rack up more debt by doing this (unwittingly providing a source of funds for the settlement company to leverage), it is wise to at least give it a try.
o A settlement agency isn’t a loan or a consolidation service. They won’t issue you a new credit card. They are, however, going to help you manage your debts. They will negotiate lower payments and lower card interest rates with your creditors. They will get your creditors to agree to accept your terms.
o Debt settlement will have lower effect on your credit versus a bankruptcy, taking away a bankruptcy is often much worse debt relief option, and the effects will linger for years both to your credit report and your overall lifestyle.
o If you are considering debt settlement, most agencies will ask for at least the amount of the debt owed, but many will require a full payment. If you pay a percentage of your debts and they come up shy, you are just out of luck.
o Debt settlement is your best option for continuing to live and providing a way of proving your credit worthiness, your ability to pay back what you owe, without filing for bankruptcy.
o Debt settlements along with reduced payments and lower interest rates should take that next believing step to restore your trust in the sinking economy.
