If you are in way over your head in debt with a particular company, then there is a good chance that enrolling in a debt settlement program is the right move for you. Before doing so, however, it is important to learn all you can about the settlement process. You should never automatically enroll in settlement or any other debt relief program without knowing exactly how it will impact you in the short and the long terms. Consider asking yourself and your debt relief specialist the following questions before getting started.
How Does Debt Settlement Compare to My Other Options?
While debt settlement is a great option, it is definitely not always your only option. If you are dealing with multiple types of debt that you just can’t seem to get a good handle on, you might also want to consider debt consolidation. You could also look at ways to pay your debt back yourself or even debt management plans. Liberty Debt Relief understands that there is no one-size-fits-all approach to handling debt, and we are always more than happy to help people find the right move for their financial future.
Always make sure to look at how much money you will save with the various options, the length of time it will take, and even how the choice will impact your credit score. Doing so will help you have a more comprehensive outlook so you can make the best decision for you and your family.
What is My Financial Range for Settling?
If the debt settlement process is what you believe is right for you, then your first step is to take a look at what you owe and what you can afford. During settlement negotiations, the lender will be looking to see how much they can get out of you in the shortest amount of time. While, of course, you want to have to pay the smallest amount possible, you also need to consider the possibility that the lender might be very stubborn in what they will accept. Your best bet is to set a range of affordability based on your budget. You can work with your debt consultant to determine your ideal outcome — which could be as little as 50 percent of what you actually owe the lender — and what you are willing and able to spend on this debt — about 80 percent of what you owe. As long as you are confident you can make the monthly payments for the higher option, you should be well on your way to having a successful negotiation with the lender.
How Will This Impact My Credit?
Credit is always a main concern when it comes to finances, and engaging in debt settlement is no different. During the settlement process, you will work with a debt consultant and your lenders to negotiate a new amount you owe. This typically requires that you provide proof of your financial hardship, which may include lists of red flags currently on your credit report thanks to late or missing payments. These delinquent marks have a negative impact on your credit score, and it’s possible that debt settlement may benefit your credit by providing you with more manageable monthly payments that you can make on time.
Are There any Settlement Fees?
There are plenty of moving parts to consider when you partake in a settlement process. Sometimes, lenders may want to charge you a fee for settling your outstanding balance instead of paying it in full. If so, that will be explicitly stated in your original contract and during the negotiation phase of the process. If they do charge a fee, a debt relief company can sometimes convince them to eliminate the fee in exchange for you paying the negotiated balance as quickly as possible. Your debt relief company may also charge a fee, but your will not be charged before the settlement is made, as per federal law.
How do I Make Payments Every Month?
The payment process for debt settlement can differ based on your situation as well. Sometimes, people are able and choose to pay the negotiated amount in one single payment. If you are not able to do so, you can also do monthly payments for a set amount of time. Depending on the lender and debt relief agency, you can choose to either have those payments automatically deducted from your checking account or make the payments manually. If you choose to do automatic payments, it is crucial to make sure you have enough money in your account on the withdrawal date every month. If you will make manual payments, you must make sure to pay in full and on time. Failure to do either can result in the negotiation breaking and you owing the lender even more money.
How Long will it Take to Repay the Debt?
This simply depends on how much money you owe and the process you plan to pay it back. If the settlement process results in you only owing about $3,000, you may be able to pay that back in just three to six months. If you owe $10,000 or more, it will likely take at least a year to pay it back. Whatever the case, it is important to know exactly what the creditors expect after negotiations. The last thing you want to do is enter a payment plan that you cannot afford.
What do I Need to do During This Process?
If you choose to work with experienced debt relief specialists, the bulk of your work lies within setting up an appointment to speak with the specialist. During your meeting, you will discuss what your income and expenses are and how debt settlement will fit within your financial means. After that, your specialist will take care of most of the work and will explain everything you need to do step by step.
Start Your Debt Relief Process Today
The best way to have your settlement process questions answered is to get in touch with Liberty Debt Relief. From day one, our debt consultants will work with you to make sure you understand and are prepared for debt settlement and will make sure you get the best negotiation deal available. Contact us today to get started.
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