Debt Reduction: 5 Questions You’ve Always Wanted to Ask
If you’re struggling to see a future beyond debt, the idea of settling that financial burden is probably appealing. If you could just get those debts paid off and out of your hair, then you’d be able to stop worrying, and you wouldn’t feel anxious every time the phone rings.
Debt settlement has grown significantly in popularity over the recent years. It works through communication with a debt settlement company who will negotiate your debt for much less than the original balance. If you’re still confused about how debt settlement could work for you, the following list should answer some of your questions.
- How Does Debt Settlement Work?
The debt settlement process involves negotiation between yourself and your creditor, requesting the option for you to pay off less than the principal balance you owe on your debt. When you work with a debt settlement company, the company is responsible for negotiating on your behalf, which can be a much better option for many people.
- Are There Alternatives to Debt Settlement?
There are alternatives to settling your debt if you feel it may not be right for you. For example, some people review all their options and still opt to continue making minimum monthly payments. Other people find that they would be a good candidate for a debt management plan. Sometimes bankruptcy might be your only remaining option and many view bankruptcy as the last resort.
- What Will Happen to My Credit?
If you’re struggling with debt, your credit is probably less than perfect, and your FICO score will likely decline even further during debt settlement. Unfortunately, it is often the case that your credit needs to get worse, before it can get better. Regardless of your score, however, it’s important to avoid applying for new credit during a settlement program, as it doesn’t make sense to add additional debt while settling an existing problem.
- What Kinds of Debt Can Be Negotiated?
There are certain kinds of debt that cannot be negotiated through a debt settlement program. However, most types of unsecured debt can be tackled quite effectively. Unsecured debts are those that are not tied to specific material items that could be repossessed by a creditor, such as a car, or a home.
- How Much Will Settlement Cost?
The amount of money that you will need to pay to become debt free will depend on a number of crucial factors, including your ability to deliver monthly payments into a program, your credit balances, and the amount that can be negotiated off of your debt balance.
If you need help understanding debt settlement and negotiation, please contact our office for a free consultation.