If you're living in Washington DC, you're unable to manage your unsecured debts, and pay them off, then you can try Washington DC debt consolidation or settlement. By doing so, you can lower your monthly payments and replace multiple bills with a single monthly installment on your credit cards, medical bills, etc. Read on to learn about Washington DC debt consolidation and settlement.

How does Washington DC debt consolidation help you repay bills?

Contact a Washington DC consolidation company:
You can contact consolidation companies in Washington DC to help you consolidate and combine multiple bill payments into one payment every month. When you enroll in a consolidation program offered by a reputable company in Washington DC, a debt consultant will assess your financial situation. This assessment will help the consultant negotiate a low interest payment plan with your creditors. So, if you've thought of filing for bankruptcy, try to consolidate and get rid of your bills first. Learn more about consolidation programs.
Take out a consolidation loan to pay off bills:
Instead of getting help from a consolidation program, you can also take out a consolidation loan from a lending institution in Washington DC. However, make sure you take out an amount that will help you pay off your outstanding balances, especially the high interest bills. This way, you can replace most of your bills with a low interest loan that's easy to pay down. Learn the details...

You can also consolidate your bills yourself. By doing so, you can save the fees that you would need to pay to a consolidation company to take advantage of their services. Learn more...

What are the other debt relief programs in Washington DC?

You can get help from a Washington DC debt settlement program to pay back what you owe to your creditors. In a settlement program, the company negotiates with your creditors and/or collection agencies to reduce the amount payable.

For example, let's say you have credit card bills worth $50,000 and your creditors agree to reduce the debt amount by about 40%.

So, your outstanding balance = $50,000

Amount forgiven by creditors = 40% of the balance

Using the Debt Settlement Calculator, your outstanding debt will reduce to = $30,000

Therefore, you save = $20,000

Alternatively, you can try a credit counseling session. A credit counselor will assess your financial situation and suggest suitable ways to manage your debts better. If required, they can offer you a debt management plan (DMP) where you can pay off your bills comfortably.

How can you avoid mistakes in consolidation and settlement?

Here are some mistakes that people make while paying off bills with help from consolidation/settlement programs:

Choosing the wrong company: You should always shop around before choosing a Washington DC debt consolidation or settlement company to pay off your bills. It is advisable that you choose a reputable and reliable company. You should choose a company that has gotten high ratings from the Better Business Bureau (BBB).
Continuing to accumulate debts: It is a common mistake to continue charging on your credit cards (cc) before paying off your existing ones. If you do so, you won't be able to get a hold on your debt problems.
Not checking credit statements: When you're paying off bills through a consolidation program, you should always check the credit statements sent by your creditors. By doing so, you are assured that the consolidation company is paying your creditors and/or collection agencies the amount agreed on.
Not monitoring credit reports: It is advisable that you monitor your credit reports and check whether your account status (es) is updated properly after you settle your bills. For example, after you settle a credit card bill, the account status should get updated as "Settled", "Paid as agreed", etc. depending on what you or your settlement company has negotiated with your creditor(s).

Apart from above, you should also assess the fees charged by a consolidation or a settlement company. You should report the company to your state's Attorney General if you think such a company is charging fees that are too high.

The Washington DC State Attorney General's contact information is:

Washington DC Office of the Attorney General

441 4th Street, NW, Suite 1145S

Washington, DC 20001

(202) 727-3400 (Main)

(202) 347-8922 (Fax)

FAQ on Washington DC debt consolidation and settlement

Q) My credit score is presently 560. I have to pay off about $48,000 on 4 credit cards. Should I choose to go for consolidation or settlement?
Ans: If you're able to pay the minimum monthly installments on your cc bills, yet it's getting difficult to manage all your cards together, you can get help from a consolidation program and have your bills replaced with a single monthly payment.

However, if the overall balance on your unsecured bills is too high for you to manage, then a Washington DC debt settlement program may be suitable for you. This is because the settlement company can negotiate with your creditors and reduce the principal amount. In your case, you can choose settlement if you're not able to pay off $48,000 in full. However, your credit score will decrease further if you get help of a settlement program.

Q) I am thinking of approaching a settlement company to pay off my bills. However, I have learned that the forgiven amount is taxable. Is it true?
Ans: Yes, you may have to pay a tax on the cancelled or forgiven debt amount when you get rid of your bills by paying less than the outstanding balance. This is because the Internal Revenue Service considers the forgiven amount as 'Income'. You can avoid paying income taxes on the amount forgiven if you can show you were insolvent on the day before the settlement was finalized. Your creditors must file a 1099-C Form with the IRS and send a copy to you. You also have to report the forgiven debt amount on your Federal tax returns.

Q) Can I consolidate pdls in Washington DC?
Ans: Payday loan lending is strictly prohibited in Washington DC. If you have payday loans to repay, you only need to pay the principal amount you've borrowed. You're not obligated to pay the interest on these payday loans.

Q) I have 5 cc bills worth $66,000 and department store card bills totaling $23,000 to pay down. A Washington DC collection agency is constantly calling me for payments. The SOL on the debt hasn't expired yet. I have only $10,000 as savings. Can I settle the bill that has already been sold to a collection agency?
Ans: Since your outstanding balance is quite high, it is better to settle your bills instead of consolidating them in a program. A settlement program works best when your outstanding balance is high and you cannot pay it off completely. So, in this situation, enrolling in a Washington DC debt settlement program may be the right choice for you.

If you get professional help, the Washington DC debt settlement company will notify your creditors and collection agencies that you've enrolled in one of their programs. It'll give your creditors a reason to believe that you're trying your best to pay off your bills. As a result, some of your creditors or collection agencies may stop harassing you with frequent calls and letters.