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Are you a Minnesota resident burdened with huge debt amounts and your present financial state seem inadequate for you to pay off your debts in full? Are those harassing collection calls and the fear that you might go bankrupt troubling you every minute? If that is your plight, then you should consider debt settlement and get yourself out of your debt problems.
Debt settlement is a debt reduction program where the creditor accepts a reduced sum of money from the debtor that is considered to be full payment of the obligation.
It is the safest option for debtors who cannot afford to make full payments on their debts but desperately want to avoid the hazards of bankruptcy.
You can settle your debts either by directly negotiating with your creditors to reach a settlement, or you can enroll with a debt settlement company accredited by the Better Business Bureau in Minnesota.
You might find the idea of negotiating with your creditors a little difficult. Indeed it is not very easy, but at the same time it is not impossible. You can follow the steps given below to negotiate with your creditors and reach an amiable settlement of your debt accounts.
Here are the steps to negotiate with your creditors:
If you do not want to negotiate with your creditors directly, then you can enroll with a debt settlement company in Minnesota to get your debts settled. When you sign up with a settlement company, the company takes up your debt issues and works on them.
The following is the step by step method that the debt settlement company will use in order to settle your debts:
The duration of debt settlement process typically depends upon various other factors, such as the type of debt, the number of debts you are settling, the total debt amount you are settling, etc. While a credit card debt settlement takes about 3-9 months, most other debts take about 12-36 months.
The impact of debt settlement on your credit score mainly depends upon your current credit score and the delinquency of your accounts.
If you settle your delinquent accounts, your credit report will show them as "paid off"/ "settled" and that will boost your credit score.
Debt settlement can be also helpful even if you do not have delinquent debts and your credit score is in a good shape. The prime reason that causes a debtor to choose debt settlement is their inability to continue with the monthly payments towards the debts.
When you sign up for settlement with non-delinquent debts, your credit score may lower. But on successful completion of the settlement, your score will rise again. That will put you in a better position than someone who has been defaulting on his payments.
Thus, debt settlement in general, will pave way for a good credit report.
The following are the benefits that you get from a Minnesota debt settlement program:
Debt settlement is a taxable process. Any amount forgiven in a debt settlement program is regarded as taxable income by the IRS.
On the completion of the settlement process, your creditor should report your forgiven amount to the IRS and send you a 1099C form so you can report the income on your Federal tax return.
If your creditor does not send you the form, you should notify the IRS about the debt amount that was forgiven through debt settlement.