Simple Debt Solutions for Consumers Seeking Debt Help
Debt settlement is only intended for individuals and small businesses that are experiencing a financial hardship and that have at least $10,000in unsecured debts. Before entering into a settlement program however it would be wise to speak with a debt relief specialist that can go over all you options for free.
So, what is debt settlement all about? Basically, the goal is to get your unsecured debts settled for much less than you actually owe your creditors. A great debt settlement company can reduce credit card debt by 40% or more and they can often accomplish this in a reasonable amount of time. The priority is to help you avoid filing bankruptcy and ruining your credit for seven years or more. Plus, nowadays, filing bankruptcy does not guarantee that you won’t have to eventually pay those debts back.
We can say that debt settlement is the best option among the consumer debt relief programs and by paying a very nominal fee, a person can get rid of the credit card debt for good. Today, many people are going for this method and after the implementation of new laws they are hiring the services of the debt settlement firm without any fear of fraud.
Does debt settlement affect my credit score? Yes, it will. Do you have perfect credit right now? Debt settlement will hurt your credit score, but it is nowhere near the severity of having a bankruptcy on your credit report. Those take years to get off. Chances are, if you need help and have maxed out your cards or even missed a couple payments; your credit has already been adversely affected from being in this situation. Debt settlement will allow you to pay off your debts completely in a few years and then you can focus on rebuilding your credit score and getting your life back on track.
How does debt settlement work? Well, companies will want to make sure your debts qualify for the program. Certain unsecured debts do not work, such as student loans. Once you qualify, a debt settlement company will take the total of all your payments, ask you how long you want to take to pay the payments off and come up with a payment plan.
Once you hire a debt settlement firm, a representative will study your case and ask you to stop paying the installments of the credit card. In this way, they realize your lender that your financial position is not good and you are unable to pay the debts.
How much does debt settlement cost? Most of the time companies charge you based on the amount of debt you have. You should not have to pay this money up-front, it should come out of your fees each month. If you have $600 in credit card bills each month, lets’ say you pick a 4 year plan. Now you are paying $165 a month and that includes the debt settlement fees. It’s a great way to increase your monthly cash flow and pay off all your debts fast. Remember, the more you pay each month, the faster you are going to pay off your debts.
I recently read that the new Obama rules that took effect on October 27, 2010 will force debt settlement companies to complete services before any money exchanges hands? Is this true? I was scammed for $1,500 from a company in Philadelphia a couple of years back. I even mailed them a U.S. Postal money order with delivery confirmation and they said they never received it. Yet, they received the first payment I sent them with no problem. I hope this new law really does what it’s supposed to do. Protect the consumer.
It’s about time soemone wrote about this.