How To Understand Debt Settlement Negotiations
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Understanding Debt Settlement Negotiations
If you are struggling with making all of your credit payments and are faced with collections calls, debt settlement can help make your journey out of debt much more manageable. The purpose behind debt settlement negotiations is to settle your accounts for a lower amount and help you deal with the creditors.
Learning about what the negotiators do will certainly be a deciding factor when choosing a debt settlement company. Instead of trusting your finances to just anyone and risking the chance of being scammed, find a company that cares about helping you out of the trenches. You are a major part of this process and your contributions to the payment account will help it move much faster.
Negotiations should never drag out for longer than they have to, we aim to make the length as short as possible in order to save you the most money. When you understand that our goal is to help you reduce your balances and improve your financial picture, it becomes clearer that the negotiators will work toward favorable results.
The process behind our settlement strategies is no secret, we want you to understand how negotiations work. Here are 10 things that you need to know about debt settlement negotiations and how we can help.
Lowering Your Unsecured Debt
Debt settlement programs adopt a strategic approach to settling your debts, knocking them off one by one by negotiating payment for a portion of the full balance. The goal of negotiations are ideally to save you 40 to 60 percent on the full balance, more if possible. One thing to keep in mind is that every collections company is different. While one may agree to a significant balance reduction, others may barely cut the balance owed.
Most creditors and collectors have the ability to reduce your balance in exchange for a lump sum payment. The debt settlement negotiations are meant for unsecured debt as it is not associated with collateral, secured debt does not qualify because the asset can just be repossessed instead of settling for a lower amount.
Success Doesn’t Happen Overnight
Just as with any set of goals, you won’t see results overnight with debt settlement because it is a process that takes time. The amount of time is entirely up to you and your budget, we can begin negotiations as soon as your account balances reaches a reasonable amount for settlement.
Once you make the decision to enter a debt settlement contract, make sure you are ready to commit anywhere from 12 months to 48 months in order to clear all of your balances. The more money you are able to save in the beginning, the faster we can help to negotiate lump sum payments with creditors.
Timing is Critical
In the debt negotiation process, timing is extremely important. If you want to work hard toward freedom from debt, all correspondence such as legal documents and past due notices should be forwarded as soon as possible for review.
If you start off contributing chunks of money to your settlement, it will help to negotiate down your balances faster. With past due payments or history of late payments, it may be time to step in a better direction instead of throwing away thousands of dollars in interest. In order to make sure debt settlement is right for your financial needs, contact us at Financial Rescue LLC.
Don’t Worry About Speaking With the Creditors
Experienced negotiators will talk with the credit companies, work their expertise and get your debts reduced.
While debt settlement cannot be guaranteed, it will help you avoid dealing with aggressive creditors and pay off your unsecured debts.
Making Sure it Fits Your Financial Situation
Bartering with the creditors is our specialty, although we always contact you first to make sure it makes sense for your situation. Our process of negotiation is thorough and while it’s not for everyone, it is an ideal solution for mountains of debt. If you are trying to avoid bankruptcy, we may be able to help you find another way out.
Negotiators will often make multiple attempts to aim for the best deal, they are persistent and know how to generate results. We keep your best interests in mind and by ensuring that you are informed every step of the way. A reputable debt settlement company will never suggest options that don’t fit your needs, they will focus on what is right for the client.
Doing It Yourself
Doing it yourself is an option, however, financial matters are sensitive in nature. It doesn’t make sense to navigate the waters alone with heavy debts. Trying to do it yourself may save you some money but you have to deal with the creditors with no ammunition. When you hire professionals to assist with you with your debts, you can be assured the negotiators will guide you through the process.
Not everyone understands debt settlement and can barter down their account balances. Negotiation skills are vital as the creditors will not easy drop the amount due, it requires persistent effort. You don’t want to worry about the companies not accepting your offer, instead you can trust that hiring an experienced firm will protect your financial interests.
Don’t Get Confused with Debt Consolidation
Debt settlement differs from consolidation as it is designed to eliminate your unsecured debts while consolidation involves taking out a new loan, ideally at a lower interest rate. You are not actually reducing the amount you owe, you are simply trying to save money on the continuous amount of interest accruing.
Comparing debt consolidation to settlement shouldn’t be confusing when you know that the latter is putting your debts together while settlement is eliminating them. When thinking about the difference; ask yourself, “How could I benefit from having all of my debts paid off instead of taking on another 5 to 10 years of payments?”
Your Credit Can Be Impacted
You need to know up front that debt settlement may have a negative effect on your credit. While the negotiation process is taking place and your accounts are delinquent, your score can likely see a drop. There is no way to determine exactly how it will impact your score but the good news is that after negotiations are complete, you will be ideally debt-free.
It will take some time but your credit score will be able to improve and to help you enter a much better place financially. Debt can be stressful and when you are behind, the smartest thing to do is find a way out of debt. The initial impact is temporary and actions such as getting a secured credit card or taking out a small secured loan can help you take steps toward a higher credit score.
It’s Not for All Types of Debt
There are certain types of debt that will not be able to go through the negotiation process. This includes government student loans, mortgages, home equity loans, wage garnishments, child support, criminal fines, back taxes and more. Most of the debts that do not qualify for settlements that would be turned down if negotiations were attempted would be the secured debts that are based on collateral.
If you have unsecured debt, negotiators may contact the credtiors to ask for the balance to be reduced if payment is issued immediately. This isn’t always a “yes” or “no” type answer that they get back from the creditors and sometimes the debt may not qualify for a reduced settlement amount.
Taxation After Negotiation
One thing you need to know after a negotiation is complete and a creditor accepts to settle your full balance for a lesser amount is that the forgiven debt can be taxed. While there are some exceptions to this rule, it is important to consider how this will impact your finances when it comes to tax time.
An example of how debt settlements are taxed is that if you have $20,000 in credit card debt and it is settled for $14,000. The $6,000 difference between the original balance and the settlement amount would be taxable.
Knowing about how debt settlement negotiations work and how it can help you become debt free is the first step in learning about the process. We make sure you know about every detail when it comes to how our professionals provide debt relief services.
Now that you know what to expect when going through negotiations, you can contact us to determine if debt settlement is right for your needs.
The Answer To Your Debt Settlement Concerns
Financial Rescue has the answer to your debt settlement concerns.
Most of our clients pay off their balances within 36 months with one low monthly program payment.
To ask additional questions and to find out if you qualify, contact us today.
Disclaimer: Some programs and services may not be available in all 50 U.S. States. The information provided is for informational purposes only. No communication should be considered legal advice. Individual results may vary based on program terms, ability to save sufficient funds, underwriting guidelines, the creditors in your individual profile, and the willingness of creditors to negotiate. Individuals depicted in images and videos may or may not be employees, and some are actors or models, all of whom do not necessarily endorse or support Financial Rescue, LLC. Financial Rescue, LLC, does not assume any debt, make monthly payments to creditors or provide tax, bankruptcy, or legal advice.