Debt settlement in South Carolina - How to hire a debt settlement company

Many people get into debt at some point. You’re not alone if you’re struggling with your bills and looking for ways to get out of debt. Debt settlement is one of the best methods of getting out of debt. Settling your debt means you’ll negotiate with your creditors to write off a part of your debt, and you can pay off the rest in one go.

You can hire the services of a South Carolina debt settlement company, or you can choose to do the debt settlement by yourself. Your credit score will be damaged because the amount you’re paying is less than what’s due. But you will be able to rebuild your credit with time.

How debt settlement is done in South Carolina

Generally, you’ll need to pay off the debt in one go. Working with a debt settlement company, you’ll also be able to make a couple of payments to a third-party account which, after their accumulation, will be given to your creditors as a lump-sum payment.

If you try to do the debt settlement yourself, you should know that many creditors will mostly agree to forgive a part of your debt if you agree to pay off the remaining debt in one go. Although in some cases, creditors will settle your debt if you agree to a short-term installment plan. Your creditors aren’t likely to offer you a long-term payment plan because you didn’t manage to pay off your debts previously with a long-term repayment plan, and they don’t want to take the risk of you defaulting again.

3 Tips for doing debt settlement in South Carolina successfully

1. Know about your debts in detail

If you have unsecured debts that your creditors have sent to collections or if you have private student loans, then you can consider debt settlement as an option for getting out of debt. However, settling your secured loans may be a bad idea because, in this case, your creditors will require you to return the collateral before they agree to go into the settlement process. If you don’t want to lose the collateral, like your car or home, you shouldn’t go for debt settlement on a secured loan. Although federal student loans are classified as unsecured, you shouldn’t consider settling them either. One of the reasons for this is that the government generally doesn’t agree to come to the negotiating table in this case.

The other reason is that separate kinds of debt-relief methods are available that are better suited for this purpose. We also recommend getting a credit report from credit bureaus before deciding which debts to settle and which debts you can eliminate using other methods. You can get a credit report free of cost. It is best to know all about your debts, how much you’ll have to pay, and how much interest you will be paying before you go ahead with debt settlement.

2. Create a budget for debt settlement in South Carolina

People often sell off things like their possessions or inheritance to get lump-sum cash for doing debt settlement in South Carolina. Many people don’t consider establishing a budget as essential for doing debt settlement. Whether you choose to pay off your creditors in installments or decide to make an escrow balance for a debt settlement company, you should consider establishing a budget.

3. Know how much it’d cost you to do a South Carolina debt settlement

If you decide to hire the services of a South Carolina debt settlement company, you should know how much they’re going to charge you and when you’ll have to pay them.

When should you pay?

Typically, you’ll be paying the debt settlement company every time a debt is settled. However, you’ll find companies that ask you to pay a fee at the very beginning. It is recommended that you avoid those companies and go with the ones that ask for payments only after a debt is settled.

The contingency fee

If the company you decide to go with charges you a contingency fee, you must know roughly how much it will be and the percentage they’ll be charging you before representing you. A contingency fee is based on the money your debt settlement company saves for you.

The penalty factor

You should know that the more time it takes to settle, the more penalties and fees you’ll have to pay. These charges can accumulate to a considerable amount; thus, if you’ve decided to go with debt settlement, you should hurry up and settle your debts as soon as possible.

Should you hire a debt settlement company?

For completing a debt settlement process, hiring a debt settlement company isn’t mandatory. You can do the negotiations by yourself. However, know that it’ll require considerable effort from your end, which can be overwhelming. Another consideration is that you might not have the same level of relationship with your creditors that a reputed South Carolina debt settlement company might have. Thus, a good debt settlement company can help you get a better deal compared to what you’d get if you try to do it by yourself. If you’re confident about doing it yourself, you can save money as you won’t have to pay debt settlement company fees.

In some cases, creditors will only deal with debtors directly and won’t negotiate with any debt settlement company. In those cases, the debtor doesn’t get any choice but to participate in negotiations directly. However, you should ensure you get the settlement agreement papers before sending any money to your creditors.

The statute of limitation in South Carolina

A statute of limitations is a period within which your creditors will have to sue you for defaulting on your debt. Your creditors cannot sue you after the expiry of the statute of limitations, although many will do so hoping that you do not know about it.

In many cases where a debt is about to exceed its statute of limitations period, the creditors will try to get you to pay even a small amount against your debt because doing so would restart the clock again. Thus, they’ll have time to take you to court and continue the process.

You should know that if you pay on a time-barred debt, you’ll become liable for paying it off again, and your creditors can sue you in court.

The statute of limitations for a mortgage is 20 years in South Carolina. For state tax, it is ten years. For auto loans, it is six years, and for medical and credit card bills, it is three years.

Alternatives to debt settlement

If you want to manage your debts, you can visit a nonprofit credit counseling agency. Ensure that the credit counseling agency is affiliated with National Foundation for Credit Counseling or, as it is popularly known, NFCC. NFCC mandates that its members follow certain standards, which means you’ll get high-quality service every time you visit an NFCC member for credit counseling.

The credit counseling method

In the beginning, your credit counselor will look at your pay slips, bank account statements, and bills to know about your income, expenditure, and debt. You can then consult with your credit counselor regarding what your financial goals are going to be for moving forward.

Your credit counselor will then share a tailor-made plan for your needs. The program will include how you can manage your money and how you can pay off your debts. You won't be charged any money, and anyone can take advantage of it.

Other services offered by credit counseling companies

You’ll find that many credit counseling agencies offer foreclosure and bankruptcy counseling. Although credit counseling is offered for free, the rest of the services do indeed cost money. After all, they too need to make money somehow to pay their staff. If you require any service other than credit counseling, you should ask your credit counselor about it.

Conclusion

For some, debt settlement is the best way to get rid of their debt. However, there are cases where debt settlement is not ideal. There are a few risks involved, and they damage your credit score. You’ll also need to have a substantial amount of money at hand when you’re trying to settle your debts. You’ll find a few alternatives to debt settlement available in the market. And you should learn about them before deciding which one you will go with.