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Watch video: How to settle your debt fast through debt settlement

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Debt Settlement Pros and Cons

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Debt settlement is best when you:

  • Could not make payments for past 3 months
  • Cannot repay your outstanding dues
  • Do not want your creditors to file lawsuits
  • Want to pay back your creditors
  • Want to prevent your accounts from being assigned to collection agencies

Debt settlement helps you:

  • Settle your credit card debts fast
  • Pay less than what you owe
  • Save dollars and avoid bankruptcy
  • Reduce annoying collection calls

Settlement - A way to get rid of your debts

Settlement is paying an amount which is less than your outstanding dues. If your creditors are convinced that if they don't agree, then the next option is to file a bankruptcy, wherein there’s lesser chance that they would get anything.

So, they would try to recover as much as possible by agreeing to your Debt Settlement proposal.

How much to save through settlement

Amount you can pay monthly on your debts.

Pros and cons of debt settlement

Pros:

  • A You can save money through settlement
  • B Affordable single monthly payment
  • C You can get your financial life back in order

Cons:

  • A The negative item will stay in your credit report for 7 years
  • B Your credit score may get reduced to some extent
  • C You may have to pay a tax on the forgiven debt amount

How a settlement company helps you in settling your debts

Monthly payable amount

The settlement company analyzes your financial condition and decides upon a monthly payment which you need to pay to the company every month.

Settlement negotiation

It negotiates with all your creditors to reduce the payoff amount to some extent.

Get rid of one debt

Once the creditors agree on a reduced payoff amount, the company make the payment and you get rid of the specific debt.

Settle multiple debts

Thus, you clear all your credit card debts one after another with the help of debt settlement companies.

Settling debts on your own vs settling debts with professional help

Settling debts on your own Settling debts with professional help
Negotiation You need to decide how much you can pay every month The settlement company analyzes your financial condition and decides upon an affordable payment
Mode of payment Usually you need to make one-time payment towards each of your accounts You need to pay an agreed upon amount to the settlement company every month
Fees You don’t have to pay anything other than the settlement amount to the creditors You need to pay a certain amount as professional fees
How to decide You want to save more money, but you should have proper negotiation skills in order to convince your creditors to agree to settlement You want complete professional guidance to settle your debts, though you’ll have to pay a fee for the services provided

How to choose a good settlement company

Check customer reviews of settlement companies to be sure that the one you’ve chosen offers services as promised


Make sure the debt settlement program complies with BBB (Better Business Bureau) standards

Checklist of BBB requirements to get enlisted:

  • How long the business has been operating
  • The number of and nature of complaints against the company
  • Any licensing or government actions against the organization
  • Transparency of the business

It is better if you choose a settlement company that has BBB accreditation. However, if you cannot find one, you can approach a law firm.


Know about some reliable companies or law firms where you can approach.

Do’s and don’ts of settlement

Do’s

  • A Organize paperwork when you decide to opt for settlement
  • B Be proactive and contact your creditors when you face difficulty in managing any of your debt
  • C Always finalize through written communication and you can take help of debt settlement letters available online

Don’ts

  • A Don’t overlook the effect of settlement while deciding which debt relief option to go for
  • B Don’t opt for a settlement program without shopping around and comparing several debt settlement USA companies