Can you negotiate with your credit card company and settle your debt? Is it as easy as the ads read? Can you do it yourself? Do you have to hire someone to do it for you? What does it entail? Do you really want to settle debts that way? Here are some answers to questions about debt settlement.
You can hire a debt resolution company to negotiate your bills for you. The may try to settle the debt in its entirety. You might need to make payments to the negotiating company. You also have the option of doing it yourself. Not all debts can be negotiated. They need to be unsecured debt. Credit cards, student loans, and medical bills are an example. You will not be able to negotiate home loans or auto loans. These are secured by collateral. In most cases, creditors can take the collateral.
Did you lose your job? Have there been serious illness in the family. Medical bills could be piling up. There may not be much else to do. You may not be able to file a Chapter 7 bankruptcy. If you do, you may not want that on your credit report. It can leave a black mark for many years. If you try to settle your debts, it may be a way out.
If you settle your debts, it may help your credit get better. Your debt will be reported as settled. That is a bad credit mark. However, Chapter 7 bankruptcy is much worse.
You might not have to pay interest or late fees. That can be negotiated also. You might save considerable amounts of money.
You may able to get a good night’s rest. There will be no more harassing phone calls or letters. This can be a huge relief.
Not do good
Debt collectors and credit card companies may sue you. It does not happen very often. They have the legal right to do that if they wish.
Your credit rating will take a big hit. You may have trouble getting loans in the future.
If you fail to reach a settlement, it could make it worse. You may get more harassment from the creditor.
You will have to pay income tax on the money you save. If it is over $600, you will have to report it on your taxes.
Dealing with collection agencies
You may have to resort to debt negotiating. It may be your only valid solution. If it has not been at least a year, things may not go well. They may offer you a settlement. Your debt may be sold to a collection agency. You will want to know some things about those people.
Stay calm at all times. They will always take less money than they offer. Try to avoid a lot of phone contact. Mail contact is better. This will give you a record of all transactions.
You can use a strategy to erase a bad mark from your credit record. This might work for smaller amounts of debt. Offer to pay the entire amount they want. In exchange, they will wipe it from your credit report. This is a good way to rebuild your credit.
Get any agreements in writing. You do not know this person. Many collection people will lie to get what they want.
Do not accept the first or second offers. They will do better. Be patient. Do not fold to their threats or intimidation.
Debt settlement is not for most people. It should be considered a last resort. It is better than Chapter 7 bankruptcy. However, it is still a risky thing to do. If you hire a business to negotiate for you, expect fees. Some may charge a great deal. You can do it yourself.