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    5 Questions to Ask About Debt Settlement

    Jun 28, 2017

    Debt settlement is a payment strategy where a debt expert can negotiate with your creditors on your behalf in order to satisfy the debt at a discount of what you owe. Once the creditor agrees, you will be asked to pay a percentage of what you originally owe and the rest of your debt is considered settled. Does that sound like a good option for you? Well it is, and it has worked for many others who have found themselves in a similar situation. But before you take the plunge, it is best to do some research. Here are 5 questions you should be asking about debt settlement:

    1. Who will settle the debt? Employ a debt settlement services company to negotiate on your behalf. A debt services expert will contact your creditor and discuss the terms of repayment and strongly negotiate for you. They will provide you with the next steps to settle your debt with a plan customized to your situation.

    What should you look for in a debt settlement services company? Make sure to get in touch with a company that has been accredited by groups such as the D&B credibility Corp, Trust Pilot or the American Fair Credit Council (AFCC). A company with years of experience in negotiating debt will probably be your best option.

    2. How does it work? If you decide to hire one, a debt settlement company will negotiate with your lenders in order to lower the amount of your overall debt. They may ask you to put away money on a third-party savings account in order to reach an amount that would be favorable as payment to the creditor. Once you have saved up this predetermined sum, you will make the payment, and the balance would be considered paid in full.  

    3. How much can I save? If the original amount you owe is $7,500 or more in unsecured debt, then debt settlement just might be the solution for you. It could reduce the amount you need to pay back significantly. An experienced and professional debt negotiation company can slash the balance by a significant percentage. 

    4. Why should I settle? Aside from huge savings, the advantages of debt settlement are numerous. One of the biggest benefits is you can avoid bankruptcy. Bankruptcy is a way to get out of debt, but it will follow you for the rest of your life. Your credit report will suffer for 10 years due to it and you may never get a loan approved within this period. 

    On the other hand, debt settlement will not be placed on public records. Debt settlement also helps you pay back what you owe in less time compared to other debt relief options such as debt consolidation. Once the agreed-upon amount has been settled, you will be free from debt and will no longer receive any of those pesky collection calls.

    5. What happens after? Once the debt settlement company successfully reduces your loan amount and you have repaid it in full, make sure that you keep a copy of the signed agreement with you. This will serve as proof that you have successfully paid off your debt and the creditor can no longer pursue you. 

    Since everything is settled and you are now out of debt, the next best thing is to reassess your sources of income and budget your money. This way, you can avoid the pain of being in debt again, and you can reallocate that extra money you have each month. This will translate to savings for you in the long run, and you will have access to some cash in case of emergency. Debt settlement can make all this possible.

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