Has debt consolidation failed to resolve your credit card debt issues? Then this debt relief option in Mississippi (MS) is not the solution for you. Lump-sum debts require a better solution and debt settlement may be the answer.
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During debt settlement, you or a settlement company negotiates with your creditors in order to lower the amount you owe. A company gives you the assistance of a debt settlement attorney, who does the negotiating for you.
Creditors have a good reason to settle debts with their debtors. By settling, the creditor can expect to get back a part of the debt amount, but if the debtor files for bankruptcy their chances of recovering anything are slim.
In Mississippi, the settlement procedure is same in any other state. You can negotiate your debts with your creditors on your own or you can seek help from a professional debt settlement company and get advice from one of their debt settlement lawyers. When settling your debts with a company, the company works on your behalf to negotiate a deal that enables you to pay the minimum amount to your creditors.
If you choose to work with a debt settlement company, always check their accreditation by the Better Business Bureau (BBB), to avoid a scam!
How long the settlement process takes depends upon the total amount of debt, the debt type, and the number of debts that you owe. The usual time period for debt settlement ranges from 1 to 3 years.
Other factors include the time it takes to get approval from the creditor and your ability to met settlement requirements.
Debt settlement has a more negative effect on your credit score than debt consolidation does. This is because with debt settlement you repay much less than the amount you originally owed to your creditors.
However, the negative effects are temporary. It depends on how long you take to repay your debts by making the minimum monthly payments. With a well designed debt settlement process, you can settle your debts within a short time period.
The biggest benefit of getting debt relief through a settlement company is that you don't need to take any head-ache regarding negotiation or collection calls. The settlement company will take care of it. However, there are other benefits as well, which are:
The federal tax consequences of debt settlement in Mississippi are the same as in other states. Any debt forgiven by your creditors is considered income by the IRS and must be reported on your income taxes unless you can show you were insolvent before the debt was forgiven.
Every creditor who forgives a debt must report that amount to the IRS and state taxing authority and send you a 1099-C before April 15th of the year your income taxes must be reported.