Eliminate Debt Quickly With Debt Settlement

If you're financial situation has reached the point of no return and you're heading toward bankruptcy there is one last option you should consider - debt settlement. Creditors like credit card companies have a lot to loose if you default and are often willing to work with you and negotiate a settlement on your debts.

  • Negotiate with creditors
  • Reduce debts
  • Pay off balances
  • Avoid bankruptcy

What is Debt Settlement?

Debt settlement is when you negotiate with your creditors and settle on an amount less than what you owe. It is often seen as the last resort before bankruptcy. This differs from debt management, which typically involves negotiating lower rates and fees and consolidating debts to help you get payments under control. Debt settlement will only work with unsecured debts like credit cards. You may attempt to reach a debt settlement with creditors on your own or hire a debt settlement firm to do it for you.

How does it work?

You should begin by talking to a non-profit certified credit counselor. They can advise you whether or not debt settlement is a good option. Once you've hired a debt settlement firm to negotiate on your behalf, you will typically stop making payments while the negotiations go on. Debt settlement firms will usually try and negotiate down 40%-50% of what you owe. In exchange, they will take a percentage of the money they saved you and you will agree to pay off the negotiated settlement in one lump sum. Be sure to check out any debt settlement firm you're considering with the Better Business Bureau and review carefully all agreements before you sign.

What's the down side?

You may do some damage to your credit rating during the negotiation process and/or by settling. You will also owe the IRS and your state income taxes on any debt that was negotiated away unless you can prove that you were completely insolvent. During the negotiating period when you've stopped making payments you will be racking up late fees and penalties and risking your credit. If the debt settlement firm doesn't come through with a negotiated settlement, you may be stuck with more debt than you started with. There are unscrupulous debt settlement firms out there so be sure to do your homework when choosing one.

What are my alternatives?

Debt settlement can involve costly fees and in many cases damage your credit rating. You should be sure to exhaust other options before settling.

  • Create a budget and see if you can cut expenses and put those savings toward your debt payments
  • Consider a second job if you're working
  • Call your creditors and see if you can negotiate down interest rates and fees on your own

There are pitfalls to debt settlement, but it may also be your last shot to avoid bankruptcy. Exhaust all other options and do your research before hiring a debt settlement firm.

Other Debt Settlement Articles Related Debt Settlement FAQ's
Begin Online or Call 1-888-439-5454

Find the Right Debt Solution
Start With a FREE Debt Analysis

1. Which of these best describes why you are
    in debt?

2. What types of debt do you have?
    (please check all that apply)
img
Please Note: Unsecured debts are debts such as credit cards, personal loans, lines of credit, store cards, medical bills, and utility bills that are not secured by collateral. Mortgages and car loans are NOT considered unsecured debt.
Privacy Policy | Terms & Conditions | Sitemap | © 2004-2012 Triad Media Solutions, Inc. All Rights Reserved.