Debt settlement is one solution to dealing with overwhelming debt. You can use debt settlement to clean up all of your debt, or you may use it to clear up a portion of your debt.
Debt settlement does offer you more freedom than alternatives such as bankruptcy or credit counseling, but there are some downsides to it as well. When you settle your debt, you end up paying less than you owe. You will also be charged taxes on the debt that is forgiven. However, if you have a lot of debt that you need to clean up, debt settlement can make it possible for you to take care of your debt and start fresh.
Debt settlement companies will contact your creditors for you and negotiate the amount that you end up paying on your debts. Once you sign up to use them, you will begin paying your monthly payments to the debt settlement company. They will hold the payments until you have enough to negotiate a debt settlement. Debt settlement companies are used to negotiating and working to get you the best deal. Unfortunately, they are also known to close shop suddenly and take your money with them. You need to make sure that you research the company that you use carefully.
You can do credit card debt settlement yourself. Most credit card companies will negotiate a settlement with you if you are already behind on your payments. You can usually settle for a lot less than you owe, but you will need to pay the settlement in one lump sum. The first thing you need to do is save up the money that you think you will be able to settle for, usually you can do credit card debt settlement by paying between 10 to 50 percent of the original amount owed. You will need to negotiate with the company. When they agree to the settlement, do not send anything until you receive a letter in writing stating that amount you are paying will count as settlement in full for the debt. You will need to hold onto the document once you receive.
One of the pros of going with a debt settlement program is that the company will negotiate with the company on your behalf. They are used to getting money knocked off. It is much easier to simply send in your payment to them then to do everything yourself. They will handle the paperwork for you, as well. The major con of a debt settlement program is that the companies are not always reliable. There are too many stories of people being burned when the companies go out of business. You need to choose your company carefully.
You can choose debt settlement company by asking for recommendations from friends or family. You should also research the company online. Check with your state’s attorney general’s office to make sure no formal complaints have been lodged against the company. You can also check with the Better Business Bureau to make sure that company is legitimate.
When you are looking for ways to get out from under crippling debt, debt settlement may be an appealing option. You may also want to consider other debt settlement solutions. A credit counseling company can help you set up a debt payment plan that will help you get out of debt in a few years. You can also focus your money so that you can pay off the debt by yourself. Bankruptcy may be a last resort, although it does have a long lasting negative affect on your ability to borrow money in the future.