Monday, October 8, 2012

6 Important Things To Understand About Debt Settlement

when debt settlement makes senseThe problem with debt is that it can sneak up on you until you find yourself in an ugly mess, maybe even with debt collectors calling and hassling you. If you?re typical, you didn?t set out to become so deeply in debt. It probably happened slowly ? one day at a time ? until you found yourself staring at a virtual mountain of debts. Or maybe you had an accident or lost your job. Whatever the reason, we can help you become debt free with a program of debt settlement. Here are six important things you need to know before signing up.

1. We can only settle unsecured debts

Unsecured debts are debts such as personal loans, medical bills and credit card debts. This is in comparison to secured debts such as auto loans and home mortgages. While we can help with unsecured debts, there?s nothing we can do about those that are secured. We will tell you that in the case of an auto loan it?s important that you keep up on your payments. Lenders can repossess automobiles with absolutely no warning if you become delinquent. You could literally walk out of your house one morning and find your car gone. If your problem is with your mortgage and you feel you?re about to be foreclosed on, the best thing is to contact your lender and see what you can do to negotiate the issue.

2. You should owe more than $7,500

If you owe $7,500 or less, your best option would probably be to simply make more than your minimum monthly payments until you pay off your debts. Or a local non-profit credit counseling agency could be better suited for your situation. The rationale behind this is that settlement does have a negative affect on your credit score for a couple years. In most cases the higher costs of credit after settlement outweigh the benefits of settling your debt with a third party company.

3. You have more leverage if you have become delinquent on your bills
We can?t do much to help unless you have been unable to make payments on your unsecured debts ? such as credit card debts ? for probably six months. The reason for this is because lenders are reluctant to negotiate until they haven?t been paid for this long. They become more willing to negotiate after the six months because they realize it just makes better sense to get maybe 50% of what you owe, rather than see you file for bankruptcy and get nothing.

4. Your debts will be consolidated

When you choose us for debt settlement, you will be left with one low monthly payment. No more sending 15 payments to all your unsecured creditors. You?ll send us one affordable payment a month that will be held in an FDIC insured account. The money you send us is held in trust ? that you manage ? and then used to pay off your creditors once they accept our settlement offers. This process should consolidate your debts in 24 to 48 months.

5. Debt settlement will have an effect on your credit score

Debt settlement isn?t necessarily for everyone because it will have an effect on your credit score and credit record. As you might imagine, any time you cannot make payments to creditors for six months or longer, it?s bound to have an effect on your credit score. This is why some people choose a debt management plan or a debt consolidation loan instead of debt settlement. However, the negative affects are temporary. You will be able to quickly rebuild your credit scores after settlement due to the fact that your debt load will be much lower. You will have an improved debt to income ratio.

6. Reducing both your balances and interest rates

The other options such as a debt consolidation loan or debt management plan can do nothing to reduce the amount that you owe. But we can negotiate reductions in both your balances and interest rates, which is what makes debt settlement one of the fastest ways to become debt free. It?s just simple mathematics. If you owe $10,000 in credit card debts and pay it off with a debt consolidation loan, you still owe $10,000. And it could take you anywhere from 5 to 7 years to pay off the loan. In contrast, debt settlement could reduce that $10,000 to as little as $5000, and we don?t have to tell you how much faster you could pay that off. This is just an illustration, your results will vary based on how willing your creditors are to a settlement offer.

Contact us today

You can get fast help with your unsecured debts by calling our toll-free number or filling out the form on this page. We will be happy to explain the complete details of debt settlement and give you a free debt analysis so you can know for sure whether debt settlement is right for you or not.

Paul Ritz
I am an associate at National Relief, which is a Debt Consolidation Company that has helped thousands of Americans facing credit card debt problems. We help with debt settlement, debt management, and other debt related financial crisis' facing consumers.

Source: http://www.nationaldebtrelief.com/6-important-things-to-understand-about-debt-settlement/

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