Debt Settlement in North Carolina
Are you lagging behind on your payments? Repeated defaults and abusive collection calls have become a part of your daily life, and you are desperately looking for a solution? If that is your condition, then considering debt settlement will put an end to your troubles.
How does debt settlement work in North Carolina?
Debt Settlement is a debt reduction program where the creditor accepts a reduced amount from the debtor that is regarded as payment in full of the obligation.
You can settle your debts in North Carolina either by directly negotiating with your creditors or by hiring a professional debt settlement service.
How do you negotiate with your creditors?
The very idea of negotiating with creditors without any professional assistance might appear insurmountable to you. Yet, you may want to give it a try and save all the added costs of hiring professional help. You might not be a skilled debt arbitrator, but you can negotiate with your creditors and get your debts settled.
Here are a few simple steps you should follow in order to settle your debts:
- Know the law: You should have a fair idea about the debt settlement laws in North Carolina when you start to negotiate with your creditors.
- Convince your creditor for settlement: Contact your creditor and tell them that you cannot continue with your monthly installments and you want to settle your debts. Also let them know that you might end up filing for bankruptcy if your settlement offer is rejected. That will increase the chance of the creditor agreeing to your proposal, because debt settlement gets them more money than bankruptcy.
- Offer a lump-sum amount: Try and offer a lump-sum settlement amount. This will also increase your chances of getting your settlement accepted.
- Propose a payment plan: If you cannot afford a lump-sum settlement, propose a payment plan to settle your debts in installments.
- Ask your creditor to report your debts as "settled": Once the settlement process is over, make sure your creditors reports your debts to the Credit Bureau as "settled" or "paid". This will help improve your credit score.
How can North Carolina Debt Settlement Companies help you?
So the negotiation process seems a little hard for you to manage on your own? But you badly need to reduce your debt burden? Wondering what to do? Do not worry. You can get your settlement done by hiring a debt settlement company, with Better Business Bureau (BBB) accreditation in North Carolina. A good BBB accreditation score assures that you are getting quality service.
A debt settlement company can provide professional debt negotiation services that can get your debts substantially reduced. Once you enroll in a settlement program, you will have to pay a small upfront fee. Before you enroll, the company will thoroughly review your financial situation. Then, the company's debt settlement attorney will notify your creditors to stop contacting you.
The company will create a trust account to help you save up for a lump sum settlement. Once enough money is saved, the debt arbitrator will negotiate with your creditors to reduce your debt principal, along with your interest and penalties.
Experienced debt settlement lawyers and skilled debt arbitrators can get your debts reduced up to 60%.
If the creditor insists on a larger amount, the company will also devise a payment plan that will help you to pay off the settlement amount in installments.
Most settlement programs do not include debt repayment only. After your debts are settled, the company will also ensure that your accounts are reported to the credit bureaus as "paid" or "settled", so that your credit scores will improve.
How to choose a bona fide debt settlement company in North Carolina?
Debt settlement scams are quite common. Many settlement companies indulge in scam activities to extract money from the clients. This can get you deeper in debt.
Therefore, it is extremely important to make sure that the debt settlement company you intend to hire is a reputable one.
Here are some tips on how to judge a debt settlement company:
- Check the whether the company has Better Business Bureau (BBB) accreditation or any affiliation with some other reputable pro-consumer association.
- Consult your friends and relatives about the reputation of the company you want to sign up with.
- Google the company's name and examine the company's available testimonials.
- Cross-check the company's past record and its successful debt settlement cases online. If you can't find any online, you ask the company directly for references or case-studies that will tell you about the company's track record. If the company is reluctant to provide any, then you should consider seeking help elsewhere.
What is the average duration and cost of a debt settlement program in North Carolina?
The average duration and cost of debt settlement programs in North Carolina depends on:
- The kind of debt
- The outstanding debt amount
- The number of debts you intend to settle
A typical credit card debt settlement case will take 3-9 months to get settled, while other kinds of debts take around 1-3 years.
How does North Carolina Debt Settlement affect your Credit Score?
Debt settlement does not affect everyone in the same way. Its impact on your credit score will depend on:
- The extent your accounts are delinquent.
- Your present credit score
If you settle your delinquent accounts, your credit score will increase automatically. This is because with settlement, these accounts will appear as "paid off"/ "settled" in your credit report.
Even if you do not have a bad credit score, and your income is steady, you can consider debt settlement. When you settle your non-delinquent debts, your credit score drops initially. However, the effect is temporary. On successful completion of the settlement program, your score will rise again.
Benefits of North Carolina Debt Settlement
Debt settlement in North Carolina gives you the following benefits:
- You avoid the hazards of bankruptcy: With debt settlement you can get rid of your obligations without having to file for bankruptcy.
- You pay less unlike with Debt Consolidation: Debt consolidation indeed simplifies your debts, but it also causes you to pay the full borrowed amount. However, with a debt settlement program you reduce your payable amount. Effective negotiation can even cause you to pay just the qualifying amount.
- You get to save quite a bit: As you pay less, you actually end up saving quite a lot of money for yourself.
- You are spared of annoying collection calls: As you pay off your debts through settlement, you are spared harassing and abusive collection calls.
Debt Settlement and Tax obligations
Debt settlement is taxable. Any amount forgiven in a debt settlement program is taxable unless you can prove you were insolvent on the day before your debt was forgiven.
As soon as your debts get settled, your creditor must report your forgiven amount to the IRS and send you a 1099C form before April 15th of the year your taxes must be reported in, so that you can report the income on your Federal income tax return. If your creditor does not send you the form then you must notify the IRS about the forgiven amount yourself.