Does Debt Settlement Really Work?

Debt settlement companies often charge expensive fees, however, some companies charge very reasonable fees. Be sure to do your homework first. Debt settlement companies typically encourage you to stop paying your credit card bills. … Some of your creditors may refuse to work with the company you choose however most banks and credit card companies will usually settle for a reasonable amount. In some cases, the debt settlement company will be unable to settle all of your debts. Again, do your homework and look for a company that offers some kind of minimum results or even a guarantee.

Debt settlement companies approach your creditors and negotiate a plan in which each creditor agrees to cancel the loan for less than what you owe in exchange for a lump sum payment. … You also pay fees to the debt settlement company for its services.

Debt settlement isn’t the only option for people who are swimming in debt. … The fees are minimal, and much lower than you’ll pay a settlement or consolidation company — and you’ll pay off your debts, typically in less than five years, without all the damage to your credit and credit scores.

Go over your income and expenses with a fine-tooth comb, figure out what you can afford, and only agree to pay a realistic amount. Generally, you can negotiate the best settlement on a debt if you can come up with a lump sum amount to resolve the debtIf you agree to a payment plan, you will likely pay more over time.

Lump-sum settlement. This option involves negotiating with your credit card company to pay less than you owe. However, it only works if you have access to a significant amount of cash that you can use to pay the card company upfront. Your credit card company may agree to reduce your debt to the principal you owe.

Start low by offering to pay 30 percent or less of what you owe and negotiate your way to an amount that you and the collector can both agree upon. Make your offer attractive. If you’re going to ask that they settle for 70 percent off of what you owe, you should pay it in a lump sum payment.

It may take some time to get there, but most unsecured creditors will settle for around 30 to 50% of the debt. Therefore, you should start with a lower offer (around 15%) and negotiate from there. Have cash on hand to make payments soon.Creditors are more likely to settle if funds can be transferred right away.

Debt settlement companies are for-profit companies and charge fees for their services. These are often a percentage of the amount of the debt it’s settling and can be anywhere from 15% to 25%. If you owe, say, $30,000 and the settlement company charges a 20% fee, do the math.

 

Comments are closed.

Call Us Now!
(800) 635-6793
Confidential Application
For Texas Residents Only!







               * indicates required  
For Texas Residents Only!
We are sorry but we can only accept your application if you reside in the State of Texas.
100% Satisfaction Guarantee

Official PayPal Seal

Click for the BBB Business Review of this Debt Relief Services in Lakewood CO