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Debt Settlement in Oklahoma

Having seemingly insurmountable debts is not easy. The situation gets worse as you repeatedly default on your payments and debt collectors make your life a living hell with their constant collection attempts. You want to do something about it, but bankruptcy is the last thing you want to do. Are you an Oklahoma consumer, stuck in a situation like this? Then, you should try debt settlement and get an easy way out of debt.

How does debt settlement work in Oklahoma?

Debt settlement works the same way across the US. It is a debt relief option where the creditor accepts a reduced sum of money from you that is considered full repayment of your debt.

Debt settlement is an effective debt solution for consumers who cannot afford to pay off their obligations in full but want to avoid the pitfalls of bankruptcy.

You can settle your debts either by negotiating directly with your creditors or you can enroll with a Better Business Bureau accredited debt settlement company in Oklahoma and get your debts settled.

How to negotiate with your creditors

The most economical way to settle debts is to negotiate with your creditors directly. Effective debt settlement requires effective negotiation. So, you need to employ the right negotiation tricks in order to make sure you get a suitable settlement.

If you do not know how to go about it, then here are the steps that you can follow to reach an amicable settlement with your creditors:

  1. 1 Know the law: Learn about the debt settlement laws in Oklahoma, before you make a debt settlement offer to your creditors.
  2. 2 Notify your creditors: Inform your creditors that you are willing to settle your accounts.
  3. 3 Tell your creditors why you need a debt settlement: It is very important that you let your creditors know that you are facing financial hardships and might end up filing for bankruptcy. Creditors are well aware that if you become bankrupt, they might lose the total amount you owe them. So, it will increase your chances of getting the debt settlement offer accepted because your creditors know that debt settlement might allow them to recover principal.
  4. 4 Offer a lump sum settlement: Creditors are likely to accept your settlement proposal if you offer them a lump sum settlement amount. So try to save as much as you can before you initiate negotiations with your creditors. But, do not agree on anything more than 50% of your outstanding amount.
  5. 5 Go for a payment plan: If you cannot afford to pay the entire settlement amount in a single payment, then you should request that your creditor allow you to pay in installments. If the creditor agrees, you can propose a payment plan that will help you pay off the amount in reasonable installments.
  6. 6 Make sure your debts are reported as "settled": After the debt has been settled, make sure your creditors report your accounts to the credit bureaus as "paid" or "settled" so your credit score improves.

How can an Oklahoma debt settlement company help you?

If you find the task of negotiation too hard and time consuming, then the best thing you can do is sign up with a reputable debt settlement company in Oklahoma and get your debts settled. Before you enroll check if the company is accredited by the Better Business Bureau so you can be sure that your money and your debt issues are in safe hands.

When you sign up with a debt settlement company, the company handles your debt issues and works on them in the following manner:

  1. First, the company will thoroughly evaluate your financial standing and your debts, and get you enrolled in a program accordingly.
  2. When you enroll in the settlement program, the company's debt settlement attorney will notify your creditors to cease all communication with you and that your debt issues are being handled by the company.
  3. Then the company will create a trust account in your name, where you will have to deposit an amount every month to save for the debt settlement.
  4. When enough money is saved (approximately 30%), the company's debt arbitrator will start negotiating with your creditors in order to fix the settlement amount. Experienced debt arbitrators can reduce your payable amount up to 60% of the outstanding amount.
  5. After the settlement amount has been determined, the company will devise a suitable payment plan in agreement with the creditors. The plan will be designed to fit your budget. You can pay the settlement amounts either in a single payment or in installments.

Duration of the debt settlement process in Oklahoma

The duration of a debt settlement program is contingent upon several factors such as the type of debt, the number of debts you want to settle, the outstanding debt amount, etc. Usually a credit card debt settlement takes about 3-9 months, while most other debts take about 12-36 months.

How does Oklahoma debt settlement affect your credit score?

The effect of debt settlement typically depends upon two factors - the delinquency of your accounts and your existing credit score.

If you settle your delinquent debts, then your credit report will show them as "settled" or "paid" and your credit score will be boosted.

If your debt accounts are not delinquent and your credit score is comparatively better, but you are not sure if you can continue with your payments, you can still go for debt settlement.

When you sign up for settlement of non-delinquent debts, your credit score will decrease, but only temporarily. With successful settlement of your accounts, your credit score will improve and make way for a good credit report.

Benefits of Oklahoma debt settlement

An Oklahoma debt settlement program will benefit you in the following ways:

  • You avoid the pitfalls of bankruptcy.
  • You pay just the qualifying amount to clear your obligations.
  • You get rid of harassing collection calls from creditors and debt collectors.
  • Your credit score improves.
  • You might save a substantial amount of money.

Tax Consequences

The IRS considers any forgiven amount in a debt settlement to be taxable income.

On the completion of the settlement process, your creditor is expected to 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 fails to send you the form, you should take the initiative notify the IRS about the forgiven amount and report it on your tax return.

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