Debt Settlement: Definition
"A program which is designed to help consumers reduce the overal debt amount, anywhere between 20% to 60% of what was originally owed. This program will harm a consumers credit if current, but if seriously delinquent it may help it. Debt settlement works to settle the debts at a fraction of what was originally owed".
Debt Settlement – Frequently asked questions and answers
People usually shy away when they think of a debt settlement program, but if you are not sure of what it actually can do maybe it should be looked at a little closer. No one should ever go by hearsay or gossip, ask the questions yourself and educate yourself on the program. Everybody’s situation is different and every debt program has different ways of helping each individual. Below are some frequently asked questions when looking for debt settlement advice.
How quickly does it take for my debts to be paid?
Debt settlement is not a loan it is a negotiation of ones balances. The balances are lowered anywhere from 40 to 70%. After this is done the consumer gets a low payment on the settled debts. This makes it a lot more manageable for the consumer rather than coming up with the money all at once. The creditors usually want the settled amount up front, but going through a debt settlement program you are able to pay the settled debt with a low payment plan.
Why shouldn’t I just do bankruptcy?
Settlement is not the same as bankruptcy; in fact settlement should always be looked at before bankruptcy. Bankruptcy is a very final move and cannot be undone for quite some time. Debt settlement is a temporary set back that can be rectified as soon as the consumer can do so. When doing the settlement program you do not have all of that interest and can pay the debts off in a timelier manner.
Does the debt settlement hurt my credit score in any way?
Temporality yes it can, but not as a bankruptcy can or any type of judgment. When doing the debt settlement program you are taking control of the situation you are able to restore your credit score. Chances are they you are already behind or falling behind and the settlement program will give you an edge to repay the debts. Ignoring the debts will not make them go away it will definitely make things a lot worse. Any debts that are $1,000.00 or more can put you in jeopardy of being sued or worse.
How long does the debt settlement program take before I am debt free?
The debt settlement program is fairly quick and the consumer does have more options in this program. The debt program usually take anywhere from about 12 to 48 months. The interest rates are dropped and your financial situation can change. If at any time one wants to pay more on their debts they can and there are no pre-penalties when doing so.
What debts can I put in to the debt settlement program?
Any types of unsecured debts are able to be added such as debts that are not secured by any assets like your home or car. Examples of unsecured debt are credit cards, unsecured loans, medical debts, collections, repo’s and some student loans. Any type of judgments or secured debts will not qualify for the debt settlement program.
