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Debt Settlement in Michigan

Are you a Michigan citizen, looking for a permanent way out of huge debt repayment sums that you’re paying every month? In that case, resorting to a debt settlement plan could help.

Debt settlement is one of the preferred choices for consumers in Michigan. In this type of plan the debtor and creditor agree upon a lower sum of money which is considered payment in full.

This not only helps you avoid the hazards of bankruptcy, but also reduces the principal debt amount, eliminates the late fees, and lowers the APR.

Therefore, negotiation plans give you the best mix of debt elimination and credit management.

How to go about debt settlement in Michigan?

Once you are sure you want to try debt settlement, you should decide whether you wish to negotiate by yourself or seek help from a professional debt settlement company.

If you decide on settling your debts by yourself, you must follow a few simple steps:

  • Contact your creditors: Let your creditors know that you wish to settle your debts.
  • Convince the creditor about your present financial state: In order to successfully negotiate, it is important convince the creditor about your weak finances and that you will be unable to make timely payments. Once the creditor is convinced, the creditor would prefer to agree on a settlement rather than have you go bankrupt, as retrieving the debts through bankruptcy is a time-consuming process.
  • Try to offer a lump-sum as settlement amount: Sometimes your creditor will agree to settle only if you offer to make a lump sum payment.
  • Try to persuade your creditor to agree to a repayment plan: If you find the proposed settlement amount too much to be paid at once, do not hesitate to propose a repayment plan that will allow you to pay off the sum in affordable installments.
  • Ask your creditor to report your settlement as “paid”: Once you are done with the payment, as your creditor to report your accounts as “settled” or “paid” to the credit bureaus.

If negotiating with your creditors seems too difficult to do all by yourself, you may want to consider hiring a debt settlement firm to look after your debt issues.

Michigan abounds with debt settlement companies that promise to put an end to your debt problems. But it is always advisable that you go for a settlement firm accredited by the Better Business Bureau (BBB).

The BBB accredited firms in Michigan offer excellent professional assistance of renowned debt settlement lawyers and aim at providing perfectly legal and suitable solutions to your debt problems.

All you do is pay an upfront fee along with monthly representation charges to the company. And all your debt settlement issues will be taken care of by the settlement firm.

Successful negotiation by a lawyer could reduce your debts even up to 60%. Consumers enrolled in Michigan Debt Settlement plans save a lot, which greatly helps them regain their financial stability.

Duration of the Settlement process in Michigan

A normal credit card debt settlement procedure can take 3-9 months to be finalized. You may want search the internet or consult a lawyer to get an idea of credit card laws in Michigan. This will help you understand the debt settlement procedure better. And once the procedure is clear to you, you can make best use of the settlement program you are opting for.

However, if you wish to speed up the process, you may get your debts settled within about 1 to 3 months. Even if you want to go for payment in installments, the process could be stretched for 12 to 18 months.

Besides these, in certain cases of debt reduction, the entire procedure could take about 4 years or more to get completed.

How does Michigan Law benefit Debt Settlement?

Michigan Debt Settlement laws protect consumers in several ways:

  • Michigan protects consumers from losing their homes, giving debt settlement candidates a powerful negotiating position when negotiating debts with their creditors.
  • Michigan ensures consumers a 100% homestead security in case of a lien.
  • Michigan does not exempt bank accounts from garnishments or liens. This is not an often used exemption, as most consumers with credit card debts do not have sufficient funds in their bank accounts to pay off their debts or afford a debt consolidation loan.
  • While using a debt settlement plan in Michigan, you must declare all the debts incurred by you and your spouse throughout your marriage. According to the Michigan Law, debt incurred by one spouse does not exempt the other from settling it. Creditors, being fully aware of it, may implement this in their collection procedure.

How to decide if debt settlement is right for you?

A good debt settlement program can reduce your debt worries considerably. However, you must assess your financial state before choosing a settlement program.

Here are some tips for you to decide whether debt settlement suits your situation:

  1. 1 Make a qualitative as well as quantitative analysis of all your debts. Debt settlement is right for you if have multiple loans apart from credit card debts that exceed your income.
  2. 2 Be honest to your self and try to gauge whether you can afford to pay off your debts in the next five years. If your finances look bleak, immediately consider a debt settlement plan or file for bankruptcy.
  3. 3 If you think you can manage to pay your monthly installments without fail when the debt amount is reduced by about 50%, debt settlement is perfect for you.
  4. 4 If you are having difficulty with unsecured debts and mortgage payments, a debt settlement program combined with a mortgage adjustment would be right for you. Certain financial companies in Michigan offer such programs.

Tax Consequences

Debt settlement is taxable. Any redeemed balance that exceeds $600 is regarded as taxable income. However, if your liabilities exceed your assets you may apply to the IRS for tax redemption by filing form 982. You should consult a tax specialist about this before proceeding.

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