Trying to decide if you should enroll in a Debt Settlement Program?
Debt Settlement is an option that few people know about.
Did you know that given the right circumstances, most lenders will eventually accept an amount that much less than the full amount to clear an old account from their books!
I'm talking about unsecured debts like:
- credit cards
- personal bank loans
- medical bills
- store cards
- "pay-day" type loans
- and others
Now, although I've been helping people settle debts such as these for many years, and know that it can really help, not everyone should enroll in a debt settlement program.
WHAT?
Let say you find yourself with $10,000, $20,000, $30,000 or more of unsecured debts and although you are making the minimum payments each month, you are just not seeing the balances reduced due to high interest rates and fees, a DEBT MANAGEMENT PROGRAM may be (notice..."may be") what you need.
You can check out my link above for full details of how a Debt Management Program works, but basically{
- Each of your creditors agrees to lower the interest rate and in many cases stop or forgive late or over the limit fees.
- You will make one payment that is about the same (and sometimes a little more) to the company and they will pay each of your creditors according to the agreements.
- This type of program usually take about 48 months and according to the Fair Isaac Corporation (FICO), being enrolled in a debt management program is NOT a factor in determining your credit score.
But, what if you have a considerable amount of unsecured debt and are just not able to keep up with the minimum payments and cannot afford the required payment of a Debt Management Program?
Many people will seek the help of a bankruptcy attorney, but that is not always the best option. Yes, bankruptcy is a viable option, but in my opinion, should only be used when you have exhausted every other option!
So, how does a Debt Settlement Program work?
Instead of making any payments to your creditors, you will set aside an amount of money (your budget will allow) into a Settlement Account with an FDIC insured bank.
Of course, since you are not making monthly payments to your original creditors, they will eventually be turned over to a debt collection company.
Negotiations will begin and a settlement agreement will be arranged. This agreement MUST be in writing and no payments should or will be made without it!
Most debt collectors will be open to a settlement.
So, what should you look for in a Debt Settlement Company?
- How long has the company been in business?
- Are they registered?
- A+ rateing and accredited with the Better Business Bureau?
- Does this company have a lot of complaints? If so, BEWARE!
- Does the agent really listen, ask a lot of questions to determine what type of help you really need? Or, does it seem like you are trying to be pressured into signing up right away?
- Oh, and by-the-way, the counsultations should all be FREE!
- Are there referrals or testimonials from formet clients?
- What about seeing some actural settlements?
Finally....
Dealing with the stress of a financial hardship requires information and help.
A qualified Debt Settlement Company may be just what you need, but you need to do a little homework first!
