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Debt Settlement
Effective - with greater side effects!
What is debt settlement?
If debt management is the equivalent of over-the-counter medicine, then debt settlement is the prescription medication - a lot stronger and far more serious side effects. In many cases, it is the final option before bankruptcy.
The goal of a debt settlement program is to negotiate with the lenders to accept less than what you actually owe. While that sounds wonderful, it does come with a price. Your credit score will be dramatically lowered in most cases, and the negative marks will stay on your credit profile for up to seven years. In addition, any debt "forgiven" by your creditors (the amount you do not end up paying) can be counted as income when tax time arrives.
In a debt settlement program, you voluntarily stop paying your creditors. Instead of paying them, you begin to make monthly payments to a trust account set up by the debt settlement company. The company will then begin to negotiate your debts with your creditors. Once an agreement has been struck and your account has accrued enough to pay the agreed upon sum, they will make one or more lump-sum payments to that creditor.
This cycle will then be repeated until all of your accounts on the program have been paid. It is important to keep in mind that even once you have been accepted into a debt settlement program, creditors will keep calling - in many cases, even accelerating their efforts to get you to pay because they don't particularly want to settle for a lower sum.
While debt settlement is not an ideal solution, many people who have had a significant financial hardship (such as job loss, medical issues, etc.) find that it is the only debt reduction method affordable for them. In these cases, it is a very viable solution. Handled through a reputable company, debt settlement may even prove far more desirable than bankruptcy (the surgical procedure in our medical comparison example).
If you are uncertain about which type of program is best for you, please call us at 1.866.467.1259. One of our accredited credit counselors can help you determine which remedy best fits your situation. If our debt management program isn't right for you, we will refer you to a reputable debt settlement company or a bankruptcy attorney you can trust.
