Debt Settlement: The Right Solution For You?
Over the last 50 years, Americans have notched up billions of dollars of debt, and today many are living with the stress of trying to cope with debt that threatens to overwhelm them. According to the Federal Reserve Bank of New York’s Center for Microeconomic Data, by end of September 2017 total American household debt stood at US$12.96 trillion dollars, of which US$3.70 trillion does not relate to housing and home ownership.
The stress involved for so many household heads could be considered a national epidemic. Loans for study, to buy a car, mend a leaky roof, have an operation, afford a holiday, make sure the family has a good Christmas, even to consolidate other debts, all add up to potential heart attacks, strokes and ulcers or worse! Quite literally every area of life can be impacted by the level and scale of debt entered into by individuals struggling to support families, students trying to complete college courses, the many who find themselves temporarily out of work, and even those following a dream of a lifetime only to have that dream turn sour and be left with an outsize debt and an undersized means of tackling it.
Career, relationships, mental and physical health, emotional and psychological balance, and general well-being are skewed and disordered when conducted under the mantle of debt. Every monthly payment can be a new source of worry and if that monthly payment is becoming harder and harder to afford, stretching into the future like a life sentence, then maybe you should consider debt settlement.
Debt settlement may not be for everybody, but debt settlement has helped many people considerably by steering their move away from the debts that are strangulating in them.
Debt settlement enables an individual with unwanted debt to approach their creditors with a lump sum payment completion offer in exchange for debt forgiveness, the wiping away the remainder of the loan. It can be a sensible strategy for anyone feeling constrained and stressed with overwhelming debt.
Here’s how debt settlement works and what the benefits are:
A Debt Repayment Strategy
Debt settlement is essentially a debt repayment strategy. It works through negotiating a partial payment with your creditors in exchange for their agreement that your debt is over. While this sounds an easy solution, it is a little more complex! However there is evidence to show that in the United States over a third of people entering a debt settlement process have up to 75% of their debt removed within three years and this removes a considerable amount of stress from their lives.
There are two different ways your debt can be negotiated in a debt settlement program: one large sum or several payments over time. Creditors, generally, are more amenable to agreeing a one lump sum settlement.
It should be noted that certain types of loans are not open to debt settlement: such as unpaid student loans. It is the preserve of unsecured debt where the only alternative is that you can’t pay at all.
There are two ways to approach debt settlement - with the help of professionals or independently:
Working with professionals
The advantages of working with Financial Rescue, a professional debt settlement company, are huge. We have a ready roster of experience, knowledge and skills to use in our clients’ favor. We have a network of contacts amongst creditors - many likely to be our clients’ creditors, and an excellent reputation amongst those creditors. We are able to negotiate and advocate on our clients’ behalf without emotional involvement but with professional distance necessary to get the best possible repayment deals on their behalf. The most common means by which this process works is for the client to cease payments to the creditor and make payments direct to an escrow account. Once enough funds are established in that account, we will negotiate a final payment with the creditor on our clients’ behalf. Financial Rescue will always work unceasingly for, and negotiate in the best interests of, all our clients whatever the scale or circumstances of the debt.
The Advantages of Debt Settlement
Debt settlement may not be the best option for everyone, but when you are struggling to make minimum monthly payments, it may be the best option for you.
Debt can be repaid much more quickly
Debts are usually paid off between 2 and 3 years after the start of a debt settlement process. Making payments on the minimum monthly payment terms can take up to 15 years to repay.
Avoidance of bankruptcy
By far, the biggest reason most people choose debt settlement is so they can avoid filing for bankruptcy. The Bankruptcy Reform Act of 2005 made bankruptcy more difficult by instituting a scrutinous “means test” the consumer must undergo and pass before they will be approved to file bankruptcy. Bankruptcy Chapter 7 and Chapter 13 will stay on your credit history for 10 and 7 years respectively and can affect your ability to find a job, apply for a loan, and rebuild your credit score. In addition to the term limits, bankruptcy creates a permanent public record. Some credit, job, and rental applications may even ask if you have EVER filed bankruptcy. Bankruptcy never completely goes away.
Moving Forward with Debt Settlement
Before you make any decisions about what to do going forward, there are a few important things you should consider. First of all, the IRS does consider any type of debt forgiveness as income, so you may have to pay income taxes on that amount.
Debt settlement will appear in your credit history for the as long as the debt is reported, typically up to 7 years (bankruptcy will remain 7-10 years, and creates a permanent public record). Because of this, it’s best only to consider it if your credit score is already low due to your inability to pay.
For many, debt settlement is the best solution going forward, here are a few things to keep in mind:
Financial consequences: worth the effort
Since you will be ceasing payment on your debts for a temporary period of time, you can expect creditors to send letters to you, and to report your unpaid history onto your credit history. While this may impact your credit report, it is temporary. Your credit score will begin to improve once payoffs have begun. However, if you qualify for debt settlement then there are already significantly worse negative factors working against you on your credit report. You can take comfort from the fact that Financial Rescue has your best interests in mind and is negotiating strongly on your behalf for the lowest possible final payment.
Start the process quickly
Don’t wait until months of unpaid installments have accrued. The sooner you start debt settlement the sooner your debt problems will be dealt with, and the sooner creditors will understand that despite problems you are not turning your back on what you owe. This will hold you in good stead when you need their favor at a future time.
Financial Rescue is a reputable and experienced professional debt relief company that has been in business over 10 years, and will represent you and advocate at your behalf.
We will help you determine the outcome of your settlement in a dedicated, professional and skillful manner. We have extensive experience in the industry and will not pressure you to make any immediate decisions, or pressure you into a program that is not right for you.
If a debt has become an unmanageable burden in your life, you don’t have to go through it alone.
At Financial Rescue, we have certified debt relief professionals who can walk you through all of your options to help you decide on the solution that is right for you. Contact us today for a free consultation where we can learn more about your situation. Our experts, certified debt consultants, can come up with a solution that is specifically tailored to meet your individual needs.