When you are neck deep in credit card debt the first solution that comes up to your mind has to be bankruptcy. Well, it is quite common and you don’t have to take blame for that! While trying to file bankruptcy, you will come across a clean financial structure. It might even cause some serious damage to credit, which will take years, even decades, to fix and repair. The easier way than bankruptcy to get out of this debt hole is by settling the debt. No, you don’t have to pay the entire owed amount for the settlement but just a percentage of it, preferably 30% to 70% of it.
For the companies:
Searching the internet will let you come across so many companies, advertising for debt settlement help. Well, you can try taking help from these agencies, but only when you have enough money in your pocket as they charge some hefty fees. Moreover, chances are high that they probably won’t guarantee help all the time. The cheaper and easier substitute is to settle your debts all by yourself. For that, you need to get into a conversation with the creditor directly. If you are not quite sure on ways to cover the settlement case, some helpful and easy going tips will probably guide you through the entire procedure.
Ways in which debt settlement actually works:
Whenever you are settling a debt, the creditor has already agreed to accept less than the owed full balance. You have two options in this regard. You can either make one major payment or go for various smaller ones. The remaining balance will be left forgiven and forgotten. Depending on creditor and the amount you owe, you can settle for any amount, around 30% to 70% of outstanding debt balance.
• Mostly, the creditor is going to consider a settlement, whenever any account is delinquent. However, it is important to keep in mind that the creditors are not always waiting to accept your offer.
• Letting go of your account as unpaid will not improve your odds of procuring a settlement. Furthermore, the missed payments will again be reported on credit.
• If an amount of over $599 in debt is forgiven, you have no other option but to report it as income on taxes, according to the government rules and regulations on taxes.
Mandatory points to consider:
Always remember that debt settlement reviews can easily showcase the truth behind this monetary rule. Settlement comes with its share of pros and cons. Debt settlement has the power to offer peace of mind as hanging debt is way too stressful to handle for long. Another major positive sign is that negotiating debt settlement mainly means you have to pay creditors less than what you owe them. These are just the pros, but that isn’t end of story. There are some cons involved in this matter, as well.
• Remember that creditors will definitely report to credit bureaus when you settle the debt for less than full amount. This is going to add a negative point on credit report for as long as 7 years. This step, in turn, can lower credit score too.
• Another problem with debt settlement is with those companies, which can take advantage of such indebted clients by asking for higher fees and making some promises, which they can never keep up with.
So, still if you think of enlisting help in credit card settlement negotiations with firms, always remember to check out the reviews and do your bit of independent research.
Try preparing for a settlement offer:
Before you end up calling credit card firm, you have to decide on ways to settle the debt as soon as possible. Unfortunately, there is no such set formula for calculating the amount you need to offer you creditor. It solely depends on the amount you owe and the cash you have left to work with. Moreover, it also depends on how long the account has been delinquent. All these points together can help you find an answer.
• It is always important to offer an amount, which you are comfortable at paying. However, you need to be sure that you settlement is rather fair.
• The main aim of credit card firm is to collect maximum money from you. So, there are high chances of them rejecting the settlement if it is too low.
• Furthermore, you have to decide if you are actually comfortable in paying the entire settlement amount at once. Sometimes, you might have to take breaks to pay the amount in installments, but in proper manner.
It is also a good idea to start preparing for counter offer. As the credit card firms will go for the favorable deal only, so having a second back up plan is mandatory. In case they don’t like your first offer, you have at least another plan for them ready.
You have to contact your creditor:
Once you are all set with a debt settlement offer, you have to contact the right creditor. Whenever you miss payments on credit card bills, the account will be sent to in-house collection department. As your account has been delinquent for some time, the credit card firm might decide to assign it to outside debt collection firm.
When your account has been assigned to reputed collection agency, you can still go for a negotiation with credit card firm directly. If the credit card sold your account, unfortunately you are stick with debt collector. Either way, you have to make a deal. After you are all set to make offer, decide if you need to handle negotiation in writing or over the phone. Calling creditor is definitely a faster approach to get things started. But for that, always be sure to keep records of all your conversations.
Finalize the deal:
Do not waste any more time and finalize the deal with creditor or collection agencies now. The faster you can solve the issue the better you can lead a healthy life. The process seems difficult at first, but it will turn easier.