Are you a Pennsylvania consumer steeped in huge debts and with insufficient cash to meet your monthly obligations? Have all the harassing collection calls gotten on your nerves and robbed your peace of mind? If you are stuck in a plight like this, then Pennsylvania debt settlement might work in your favor!
Debt settlement is a debt relief option where the creditor accepts reduced amount from the debtor that is regarded as payment in full of your obligations. It can be a great solution for debt-stricken consumers who cannot meet their obligations but do not want to confront the hazards of bankruptcy.
You can settle your debts by either negotiating with your creditors directly or you can sign up with a reputable debt settlement company in Pennsylvania.
If you are looking for an effective way to settle your debts, without having to spend any extra money, then the best way is to negotiate with your creditors directly.
If you do not know the tricks of debt negotiation, then you can follow the steps below and negotiate with your creditors to reach an amiable settlement of your accounts:
If you think you cannot negotiate with your creditors efficiently, then you can enroll with a reputable debt settlement company in Pennsylvania. But before you enroll, check out whether the company is accredited by the Better Business Bureau. A BBB accreditation testifies to integrity of the company and assures that your debt issues will be in safe hands.
When you sign up with a debt settlement company, the company will work on your debt issues in the following way to reach a settlement with your creditors:
The duration of a debt settlement program depends on several factors such as the type of debt, the number of debts you want to settle, the outstanding debt amount, etc. Normally a credit card debt settlement takes about 3-9 months, while most other debts take about 1-3 years.
The effect of debt settlement typically depends upon the delinquency of your accounts and your credit score before you start the settlement process.
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 debts are not delinquent and your credit score is comparatively good, but you are not sure whether 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 may decrease, but that is just a temporary phase. With successful settlement of your accounts, your credit score will increase again. Thus, debt settlement in general will make way to a good credit score.
A Pennsylvania debt settlement program gives you the following benefits:
Debt settlement is a taxable. The IRS considers any forgiven amount to be taxable income.
On the completion of the settlement process, your creditor is supposed to report your forgiven amount to the IRS and send you a 1099C form so you can report the income on your Federal tax return.
If your creditor does not send you the form, you should notify the IRS about the debt amount that was forgiven through debt settlement and report it on your tax return.