Debt settlement is the process of working with creditors to get them to accept less than the amount owed on debt to consider it resolved. When you work with a debt settlement company (like Freedom Debt Relief), they negotiate with your creditors on your behalf to reduce your debt. Debt settlement companies charge a fee for this negotiation service, but it cannot be charged upfront unless you have settled with your creditor. In a debt settlement program, you will typically stop making payments on all your accounts.
How Does Debt Settlement Work
Paying back less than your original debt with a debt settlement program is not a quick fix, making it difficult for some people to finish the negotiation period. Paying off your debt typically takes 1 – 3 years, and it doesn’t start overnight. With a debt settlement program you’ll pay down your debts one by one and they’ll each be contacted with settlement offers when you’ve saved enough money in your trust account.
What is the advantage of debt settlement over credit counseling and bankruptcy? There are significant pros to the settlement process. First, you settle your debt for pennies on the dollar. For example, my client’s debts with all their late fees and interest, amounted to $4,650 with all costs included. After a debt settlement program and a lump sum payment of $2,700, their debt was reduced by a large amount. In other words, it’s like taking your $10,000 credit card debt and reducing it to $2,000.
How Is Debt Settlement Different From Credit Counseling
With credit counseling, you may eventually be able to repay your loan, but at the end of the day, you will have racked up more than the Counselor can handle. Bankruptcy can ruin you for many years to come. Do I have to have a lump sum to be able to settle my debts? No, a debt settlement company works with you to accommodate your needs to pay off your debt and find the best solution for you. You don’t necessarily have to have the cash on hand to settle your debts. Money does not stop with negotiation.
You may be asked to make a significant payment to your lender or creditors to settle your debts, but it isn’t necessary to reach that point. How do I start a debt settlement program? The most important thing to do is to be honest with yourself about the money you owe and the budget you live on – and your creditors. You must also be willing to control your spending by agreeing to live within your means and be responsible about your finances. You have to be ready to face your creditors and possible support groups to ensure that staying committed isn’t hard.
How Much Does Debt Settlement Cost
If you choose not to pay your debts and keep hiding away, you will weaken your resolve and lower your self-esteem. Who needs the strength and support of a huge amount of money owed without being able to repay it? If you really can’t bring yourself to pay what you owe anyone, by any means, choose a licensed company from our directory of debt settlement companies to represent you who can help deal with the creditors and establish a payment plan. A strategy can include a debt settlement program – but it’s all about being honest and smart about your financial situation.
By making a plan and sticking with a legitimate debt settlement company, you won’t be “stuck” in a vicious cycle of debt and fear. We can put you on a debt settlement plan that is correct for you while alleviating your anxiety and sitting down with you to look at your income and expenditure, you can get a clear picture of where you stand and how to change your long term financial life for the better.
