For those living with a large amount of debt, the options may feel very limited and bankruptcy might appear to be the only option.
Before you pull the trigger on bankruptcy, you need to be aware that you do have other choices available. One of those is debt settlement. Many individuals wonder how it works and if it is the right option for them.
Here are 7 common questions (and answers) about how to address debt and what debt settlement really means from the experts at Effective Legal Debt Solutions.
1) What is the First Thing That Someone in Debt Needs to Do?
They need to take action and make a commitment to getting that debt settled. The fact of the matter is that debt is not going away by itself. For those with out of control debt, it can be harder to get assistance, but not impossible.
Most people that end up reaching out to a debt settlement company have been thinking about their debt for months and looked at other options, maybe even thought about bankruptcy.
The good news is that it does not cost anything to access your debt and your options. When you work with a debt settlement company, you will go over your total card debt and determine the plan that best fits your income.
2) What are Common Misconceptions About Debt Settlement?
There are negative articles and stories out there about debt settlement because some companies are taking advantage of individuals in need of assistance. People believe they have to pay a large amount of money upfront with no guarantee of results. Look for a program that does not charge anything for their consultation. Once you join a program, you should not pay for anything if you do not receive results. They need to follow the rules, guidelines, and regulations relating to debt settlement.
3) Why is Credit Card Debt Such a Problem for Many People Like Myself?
The big reason is people spend money they don’t have. People can easily get anywhere from $10,000 to $15,000 worth of credit card limits. It’s simple to run that all the way up to the maximum amount. If you are making the minimum monthly payments, then you are just paying interest, penalties, and fees. To bring those balances down, you have to make monthly payments that are just enormous. Frequently, people get caught in that cycle and there is no immediate way out.
Unsecured debt from credit cards can pile up quickly. Individuals trying to negotiate their debt on their own often times are unsuccessful in dealing with creditors and are not familiar with their legal rights.
4) What is the Difference Between Debt Settlement and Filing for Bankruptcy?
Bankruptcy is a much more involved course of action. It is a legal process with the courts and involves a trustee, whether it’s a chapter 7 or 13. All of your assets and liabilities are reviewed. You may be required to pay the full price of any creditor that makes a claim. In this scenario, a person in debt has no control over the system.
In debt settlement, the person with the debt begins by putting money into a separate savings account. The debt settlement company will then begin calling creditors and working with them to settle the debt. When an offer is made, they will present it to their client who has the option to accept or reject the settlement.
Thus, an individual has much more control over this process versus bankruptcy.
5) How Fast Can I Settle My Debt?
The speed at which a debt can be settled various based on individual circumstances. Typically, most programs take approximately 36 months or less based on the number of enrolled debt accounts.
What impacts the length of time is the total debt involved, the amount you have to negotiate with, and the status of the debt accounts. Adding extra funds to the savings account helps to expedite the process and reduce the time in the program.
6) How Will My Credit Score Be Affected by Debt Settlement?
Most of the people that look to debt settlement are actually by now behind on their payments, have missed payments or have maxed out their cards so their credit scores are usually already affected by the time they consider this option. Obviously, creditors will not negotiate with you unless you are behind on an account. So yes, it will affect your credit score in the end.
On the bright side, by completing the program, resolving your debt, and then starting fresh by making your payments on time, you can rehabilitate your credit fairly quickly. Once you resolve the accounts, it is important to make payments on time going forward.
7) Is There a Limit to How Much Debt You Can Have Resolved?
If you have a decent income and are willing to work with a debt settlement company, then there is no limit. We at Effective Legal Debt Solutions do not want to steer someone into this if it is not the best option for them. That is why we first do a debt analysis. We look at your income and total debt as well as whether we can resolve these before they reach the level of lawsuits and other legal options. As experienced attorneys in debt negotiations, we will assess the situation on a case by case basis. We’re going to steer people to whatever we think the best solution is for their personal predicament.
Need Debt Relief Assistance?
If you are falling behind on payments or overwhelmed by debt, then consider debt settlement as a viable option to address your financial needs. Working with a company, such as Effective Legal Debt Solutions, can provide you with the consultation you need to make the right decision.
Contact us today for a free consultation.
The Effective Legal Debt Solutions team is comprised of caring, seasoned professionals with years of industry knowledge coupled with personal real-life experience of dealing with debt settlement situations that many of our clients are facing today.