If you have been defaulting on your payments for quite some time, your outstanding debt amount is growing with accrued penalties and interest, and you are getting repeated collection calls a Louisiana debt settlement program might be the answer you are looking for.
Debt settlement is a debt reduction program where your creditor accepts a lower amount from you, considered payment in full of your obligation towards your creditor.
It is a legally safe solution for consumers who cannot afford to make payment in full of their obligations and desperately want to avoid bankruptcy.
You can settle your debts in either of the following ways:
If you want to avoid all the added costs of hiring professional help to settle your debts, then the best option is to negotiate with your creditors directly.
Now, if you think you are not sure about how to settle your debts on your own, then here are some guidelines on how to negotiate with your creditors:
If you feel you cannot manage you debt issues on your own, then you can sign up with a reputable debt settlement company in Louisiana to settle your debts. Ensure that the company you are signing up with is accredited by the Better Business Bureau in order to avoid a scam.
When you enroll with a debt settlement company, the company will work on your debt issues in the following manner:
While credit card debt settlements take about 3-9 months, most other debts in Louisiana take about 1-3 years. The duration of a debt settlement process also depends upon various other factors, such as the number of debts you are settling, the kind of debt, the total debt amount you are settling, etc.
The effect of debt settlement on your credit score depends upon:
If you settle your delinquent accounts, your credit report will show them as "paid off"/ "settled" and that will increase your credit score.
Even if you do not have delinquent debts and your credit score is good, debt settlement can be helpful. What primarily causes a debtor to choose debt settlement is their inability to continue with the monthly payments towards their obligations. So, with debt settlement you can get rid of your obligations faster.
When you sign up to settle non-delinquent debts your accounts become delinquent and your credit score may decrease. But on successful completion of the settlement, your score shoots up again and puts you in a better position than someone who has been defaulting on their payments. Thus, debt settlement typically makes way to a good credit report.
A Louisiana debt settlement program helps you with the following benefits:
Debt settlement is taxable. The IRS considers any amount forgiven in a debt settlement program to be taxable income.
On completion of the settlement program, your creditor should report your forgiven amount to the IRS and send you a 1099C form so you can report the forgiven amount on your Federal tax return.
If your creditor does not send you the form, you should notify the IRS about the amount that was forgiven through debt settlement.
Last Updated on: 07 Apr 2016