5 Things That Are Not True About Debt Settlement
Feb 5, 2011 Debt Relief
There’s a lot of information out there about debt settlement, but not all of it is true – at least not entirely true. Financial experts, previous settlement customers, and even some debt relief companies have all contributed to the myths. What’s really true about debt settlement?
There is no government bailout or creditor money available for debt settlement. Television and radio ads for debt settlement often mislead listeners into thinking this service is available courtesy of the government. This isn’t true. While some banks received bailout money from the government, this money wasn’t given for the specific purpose of helping consumers settle credit card debt. Debt settlement is available at the creditor’s discretion.
Debt settlement doesn’t ruin your credit forever. The effect of a settlement on your credit score has been exaggerated. It’s true that your credit will suffer. By the time you get around to settlement, your credit may have already been affected by late payments. But, no negative information remains on your credit report forever. After the settlement is over, you can start rebuilding your credit score.
Debt settlement isn’t a scam. At one point there were many unscrupulous debt settlement companies in the industry. However, recent Federal laws have eliminated many of the companies who didn’t have consumers’ best interests in mind. There are many reputable settlement companies out there who will help you ease your debt burden. One rule of thumb to pick a good company is to avoid those that charge upfront.
Not all your creditors will agree to settlements at 50% or less. Some creditors may even refuse to settlement your account. The amount of the settlement you ultimately get depends on a few factors: the type of debt, the amount of the debt, the delinquency time period, whether the debt is with a collection agency, and who you speak to at the creditor’s business. You may be able to settle some debts for less than 50%, but there may be some creditors who won’t accept anything less than 70%, for example.
Creditors will stop calling you once you tell them you want to settle your account. When you’re going through settlement, you have to be careful what you say to your creditors and when. If you mention settlement too early in the process, the creditor might turn you over to their collection attorney for a lawsuit. Even though you’re planning to settle, creditors will continue to contact you about your debt because they still want to get paid. Until they agree to cancel part of your debt in a settlement, they want to get the full balance that’s owed.
It’s impossible to make a completely informed decision about debt settlement until you weed out the inaccurate information that’s been spread. A settlement is a viable option for getting out of debt – either on your own or through a settlement company. Either way, make sure you know how the settlement process works, what will be required of you, and how you can get back on track once settlement is done.
Tags: Debt Relief
An Easy Way to Get Rid of Some of Your Credit Card Debt
Sep 14, 2009 Debt Relief
I was once at this party engagement and out of no where, a bunch of people starting to cut up their credit cards. I was in shock, I would have never thought of such a thing. My heart dropped as I thought of myself never being able to use my credit card again.
Fast forward to today. After I was finally able to get rid of most of the debts I had accumulated over the years, I sat down with my friends and we came up with a good strategy for ridding ourselves of the pain that credit card debt caused in our lives.
So, a dinner one night me and my friends and I had a get-together and we all wrote down on three separate pieces of paper things that we could do live without in order to save us more money.
Mine were:
Going out to movies – Spent $200 a month on this.
Going out to dinner twice a week – Spent over $400 a month here.
Buy new clothes once a week. – I won’t say how much I spent.
After looking at my excess expenses I realized that the help for credit card debt that I needed was actually within my own self and my own spending habits. However, because I did have a legal way out because the stimulus package I was able to get relieved of my debts.
Not everything was erased, but I tell you what, it is much easier to pay my statements now that this happened. My friends also have the same three pieces of paper and we all came to the conclusion that we truly enjoyed entertainment, but we needed to find ways to watch movies without spending so much money every month on them. I think I spent around $200 per month. This money now goes towards paying down my debts.
Tags: Debt Relief
