Is Debt Settlement The Right Solution?
We are here to help you understand debt settlement.
Debt settlement is a process designed to help qualified individuals in a financial hardship pay off their debts in less time than by making the required minimum monthly payments to creditors.
Over the last 50 years, Americans have notched up billions of dollars of debt. 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 created by debt could be considered a national epidemic. Loans are used for college and vocational courses, 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. That debt adds 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 oversized debt and and the undersized means of resolving 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 is not for everybody. There are financial consequences that may affect you, and you must meet certain qualifications in order to be eligible. However, debt settlement has helped many people by helping them pay off their qualified debt sooner than if they made minimum monthly payments.
Debt settlement enables an individual with unsecured debt to approach their creditors with a lump sum payment completion offer in exchange for debt forgiveness (wiping away the remainder of the loan). Debt settlement may be a sensible strategy for anyone feeling constrained, overwhelmed, and stressed with debt.
How Debt Settlement Works
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 satisfied. While this sounds like an easy solution, it is 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.
There are two ways you can negotiate your debt settlement: one large sum, or several payments over time. Creditors, generally, are generally 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. Financial Rescue Certified Debt Counselors will help you determine if you are qualified for debt settlement.
There are two ways to approach debt settlement:
- Working with professionals, or
Working with professionals
The advantages of working with a professional debt settlement company, such as Financial Rescue, are huge. We have a decade of experience, knowledge and skills that benefit our clients.
Our programs have a network of contacts within the credit industry and an excellent reputation with them. We are able to negotiate and advocate on our clients’ behalf without emotional involvement, and negotiate with the professionalism necessary to get the best possible repayment deals on the clients' behalf.
The most common means by which this process works is for the client to voluntarily cease payments to the creditor and make payments directly to an escrow account for the purposes of settlements. Once enough funds are in the account, we then negotiate a final payment to the creditor on your behalf.
We always negotiate in the best interests of our clients.
Difficulties and disadvantages of doing debt settlement independently
For those who want to tackle debt settlement themselves, there can be many pitfalls to navigate. Approaching creditors and negotiating on behalf of yourself can be daunting, especially when you are feeling vulnerable and fragile. Large amounts of debt and the ability to maintain a calm negotiating head is difficult for most of us. Please learn as much as you can about the debt settlement process before you take the decision to go it alone.
The Advantage of Debt Settlement
Debt settlement may not be the best option for everyone. If your credit is in good standing, you may want to consider other alternatives first. But debt settlement can be a good choice for many.
Two of the biggest benefits of debt settlement
Debt can be repaid much more quickly
Debts are usually paid off between 2 and 4 years after the start of the debt settlement process. With other loan repayment terms it can take up to 15 years to repay the same debt. However, it should be noted that debt settlement will stay on your credit history for up to 7 years. Debt settlement should always be the last resort.
By far, the biggest reason most people choose debt settlement is so they can avoid filing for bankruptcy. Chapter 7 and Chapter 13 bankruptcy will stay on your credit history for 10 and 7 years respectively, and may affect your ability to find a job, apply for a loan, and rebuild your credit score. In spite of the bankruptcy term limits, bankruptcy creates a permanent public record that remains on file. Some applications may even ask if you have EVER filed bankruptcy.
Moving Forward With Debt Settlement
Before you make any decisions about what to do going forward, there are a few things you should consider. First of all, the IRS considers any type of debt forgiveness as income, so you may have to pay income taxes on that amount. So for example, if you are given $15,000 in debt relief, you will owe roughly $4,500 in taxes. There are circumstances where the IRS may waive that amount. Please consult with a tax professional with regard to tax consequences.
Debt settlement will also make a temporary negative impact on your credit history. You can expect your credit score to go down during the first few months of the program, but then begin to increase once enough funds have been paid into the escrow account to allow payments to begin. Because of this, it’s best only to consider debt settlement if your credit score is already low.
Financial consequences: worth the effort
If you decide that debt settlement is the best solution for you going forward, here are a few things to keep in mind:
The program requires you to deposit money into an escrow account, and this means you will stop making payments on the selected unsecured debts. You can expect your credits to send letters and make calls to you during this time, and it may cause your credit score to go lower until negotiations and the final payment have satisfied the debt. That situation may impact your ability to conduct certain financial transactions and may affect your ability to acquire loans for various periods of time.
You can take comfort knowing that Financial Rescue is using this time to help you save for your final payment and is negotiating strongly on your behalf for the lowest possible payment.
Do start the process quickly
Don’t wait until months of unpaid installments have accrued. This will only result in an irreversible bad history. 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.
Debt Settlement with Financial Rescue
Financial Rescue is a reputable and experienced debt settlement company which 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 long experience in the industry and will not pressure you to make any immediate decisions.
We are here to help you in your time of need.
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 debt experts can come up with a solution that is specifically tailored to your individual 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.