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Debt settlement is an effective alternative for people struggling to cope with mounting debt. By getting help of a debt settlement program, you can reduce your collection calls to a great extent and moreover, avoid bankruptcy. This is one of the key debt resolution services where professional debt negotiators deal with creditors or collection agencies, and help individuals pay off debt easily.
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Debt settlement or debt negotiation or debt arbitration is a process wherein creditor accepts a sum lesser than the original amount from the debtor, and regards it as the full payment.
When you enroll in the program, your monthly payments to the debt settlement company get accrued in a trust account for a certain number of months. You’ll not be required to make any payments to the creditors .You can access the trust account through your secure login area. Once enough money has been deposited into the account, the debt settlement company initiates the negotiation procedure with the creditors.
The debt settlement company negotiates with the creditor or the collection agency to settle on such an amount that is acceptable to both the creditor and the debtor. Once the debt settlement company settles down on something with the creditor, you can pay off the amount either in lump sum or in installments.
Usually, a debt settlement negotiation reduces a significant portion of your total outstanding debt balance. However, how much reduction you will get, chiefly depends upon the efficiency of the debt settlement company.
You can seek debt settlement services or programs under certain circumstances mentioned below
Usually, the professional debt settlement companies prefer to work with the consumers having debt worth $10,000. However, there are some companies that may agree to settle the debts lower than $10,000. All you need to do is find such companies.
Debt settlement is perfectly legal. It is one of the most popular legal debt solutions across the country. However, it is illegal to use unscrupulous tactics to make money out of the consumers. The debt settlement companies or attorneys have to comply with the state and federal laws. They can be heavily penalized for violating the FTC laws.
Some might say that it is better to manage your debt on your own. However, others might say it is wise to hire the services of an experienced debt settlement attorney. We have prepared a chart for you so that you can choose the best option for you.
|Consulting an attorney||Do It Yourself (DIY)|
|Getting genuine assistance|
|Help with legal representation|
|Guidance while signing legal papers|
|Elimination of collection abuse|
|Getting professional help with negotiation|
|Reduction in principal debt amount|
Qualified and experienced attorneys can give the right debt settlement advice to you. They can guide you with their immense knowledge, experience and proficiency.
Check out the 4 tips to select the right debt settlement attorney:
Federal Trade Commission (FTC) has introduced some laws in the year 2010, which a debt settlement company or a firm needs to follow. The laws have been introduced for reducing the debt settlement scams which have increased in the last few years.
Check out the debt settlement laws enacted by Federal Trade Commission:
Debt settlement primarily helps you repay unsecured debts. This means that you can use debt settlement service to reduce debts, which are not secured by collateral.
A professional debt settlement company can help you settle the following debts:
Keep in mind that you can’t settle secured debts like mortgage.
You’ll have to pay a fee for using the professional debt settlement services. After the new debt settlement laws came into effect in the year 2010, the companies can’t charge any upfront fees. They can’t also charge exorbitant fees for their services. The companies can only charge fee on the total amount saved by you, the consumer, through debt settlement.
State laws also impose certain regulations which an arbitrator must strictly follow while charging his fees. You can always compare Oak View Law Group’s fee structure with that of any other debt settlement company in order to get a fair idea about the costs involved in a settlement process.
When a creditor accepts a settlement offer, he forgives a part of your debt. Quite clearly, he loses money. You may wonder why a creditor agrees to work out a settlement agreement with the consumer when he loses money.
Creditors are intelligent people. They understand that a consumer can go bankrupt if his financial state is very poor. In this case, they can hardly recover any money from the consumer. Debt settlement is a better deal for a creditor since he gets back a significant part of the original debt. This is why creditors often agree to settle a debt.
The duration of a debt settlement program usually depends upon the total number of debts, the kinds of debts, the total debt amount which a consumer intends to settle, and the amount he can afford to settle for. In general, a settlement case gets completed within 2-3 years. The more you, the consumer, can pay, the earlier your debt gets settled.
Though debt settlement solutions are quite beneficial for the consumers, but not everyone is qualified for this program. Your creditor will agree to settle your debt if:
Like every debt relief program, debt settlement too has its share of benefits and drawbacks. Check out the debt settlement pros and cons before reaching upon a decision:
Here are the 5 settlement pros you must be aware of:
Check out the 2 settlement cons before getting help from an attorney or a company:
However, most people who settle their debt already have blemished credit. Creditors will agree to settle your debt only if you’re missing payments consistently (which drops your credits score). Therefore, credit score should not be an issue with you, the consumer, who are contemplating to settle debt.
Finally, there are a lot of organizations which claim to be non-profit debt settlement companies. However, you should not work with the company simply because it claims to be non profit. The reason is, a lot of fraudulent non-profit debt settlement companies have sprang up in the last few years. They will misuse your hard earned dollars without providing any real service to you. You’re already knee deep in debt and will surely not like to get into greater debt problems.