Debt Settlement
Debt Settlement
In its most simplistic form, debt settlement is designed to hold your creditors at bay, long enough for you to conduct a business transaction with them that will reduce your outstanding balances and close your account at zero.
Debt settlement is not consumer credit counseling. It is not intended for those consumers who do not know how to manage their money or pay their bills on time. It is simply a means of reducing or eliminating unsecured debt, in order to avoid bankruptcy or other complications. It is considered to be the first step in seeking unsecured debt relief. The bottom line is that if you can avoid a third party assisted debt relief option, you will find yourself back on your feet in a much more expeditious manner and without the hassle of the long term effect that consumer credit counseling and bankruptcy leave on your credit profile.
You must be delinquent on the accounts before your creditors will consider and recognize your hardship and negotiate your balances.
- There’s no viable way around it. If you are current on your payments and not experiencing financial hardship, what reason do your creditors have to negotiate the debt that you owe? Simply put, there isn’t one.
- How fast can you save your money? Once you are 90 to 120 days delinquent, they will be concerned about their ability to recoup what is owed and will likely be willing to negotiate. If you have the money available, your negotiator will be ready to negotiate that balance and move onto the next. If not, your negotiator will wait until you have accrued enough in your settlement account to negotiate each individual balance, one by one.
You do not have 5-7 years to complete a debt settlement program.
- Debt settlement is a short term debt relief option, available to a small percentage of consumers. If you can come up with the money to offer your creditors a settlement on these balances in a timely manner, you may receive the benefit of eliminating your debt in months and you can get back on your feet much more quickly.
Your creditors will not negotiate the balance until you have enough money to do so.
- This is a business transaction. In most cases, your creditor will not negotiate a balance until they have reason to believe that you have the funds to complete the transaction. If you can’t pay your bills now, what would make them think that you were capable of saving money toward a settlement with them? It is common knowledge that if you don’t have funds available immediately to negotiate your debt with your creditors, you’ll need to use a reliable debt management program that will put you on a structured savings plan to accomplish these goals.
Typically, settlements are estimated around 40% of what you owe, so it stands to reason that you’ll need to save at least that much BEFORE anyone can really start working on the balance.
- No one should promise you settlements at ANY percentage. While most programs claim to average 40% to 60% settlements on unsecured debt, your individual history and financial hardship will likely determine what percentage of your debt is forgiven by your creditors in a debt settlement program.
- This doesn’t mean that your creditors won’t know what your intentions are. In most cases, your creditors will be notified that you are experiencing hardship and need help just as soon as you start your debt settlement program.
- If your creditor agrees to a settlement that is less than 40% of the balance owed, any additional funds left in your settlement account will simply be saved for the next settlement. If your settlement average is below 40%, it stands to reason that you will be out of debt sooner than planned.
Balances are settled one at a time.
- Once you have accrued enough funds in your settlement account, your debt negotiator will once again contact your creditor to initiate negotiations.
Any reputable debt settlement company will take the time to make sure that the program is suitable for your hardship and financial situation.
- Flexibility is an important factor due to the nature of “life”.
Your original creditor always has the legal right to contact you.
- There’s no way around this. Some creditors will ignore the limited power of attorney that is sent to them and will keep contacting you throughout the program. Most will respect that request to cease communications with you and will start communicating directly with your debt negotiator. Regardless, it won’t be your responsibility to speak to them. It’s your job to communicate with your negotiator or client services representative that you’re being contacted and by whom.
Third Party Debt Collectors Must Adhere to the Power of Attorney.
- Once your account is referred to a third party debt collector, they must abide by the Power of Attorney and the phone calls shoud cease.
- If any third party debt collector contacts you, simply contact your client services representative.
Once a settlement has been reached with your creditor, you must approve it.
- You will be notified of any settlement offer of 50% or less. Of course, recommendations will be made, based on what is known about your account and your individual creditor. You have veto power at all times.
- If you approve a settlement, a letter detailing the agreement and how the transaction should be made will be obtained from your creditor. Once that transaction has been completed, a settlement in full (SIF) letter will be issued which will document and confirm that you have settled and closed this account at zero balance and that the remaining balance has been forgiven.
Qualified Debt
- Credit Cards
- Unsecured Bank Loans
- Unsecured Lines of Credit
- Medical/Hospital Bills
- Oil/Gas Cards
- Past Due Utility Bills
- Personal Loans
- Store Cards
Non-Qualified Debt
- Gov't. Student Loans
- Mortgage Loans
- Car Loans
- Taxes
- Child Support
HomeEnrollment FormsAbout UsContact UsLegal DisclaimerPrivacy Policy
Copyright 2010 - All rights reserved - National Debt Resolution - Services for Debt Settlement
 |
 |
 |
 |
