Settling debts on your own may not be a big deal if you just have a few debts, e.g. one to three. However, debt settlement becomes a bigger task when you have several debts you need to settle. The task is probably even bigger when the debts are at different stages of delinquency, i.e. some current, some delinquent, some with a collection agency, etc.
If settling your own debts seems like a task that’s bigger than you can handle, hiring a debt settlement company to help you is a good option. The debt settlement firm, amongst other things, will act as a middleman between you and your creditors, help you accumulate the money for your settlements and negotiate and pay the settlements when the time comes. When you choose to work with a settlement company, make sure you get the answers to a few important questions.
How are you being charged?
Debt settlement companies generally charge fees as a percentage of your total debt. Settlement companies generally (more…)
As if settling your own debts wasn’t difficult enough, adding joint debts usually makes the equation more difficult. You must be careful settling joint accounts since the joint account holder’s credit will also be affected by the choice you make. It’s fair to include the cosigner in the decision, even if you’re the one who made the charges.
Creditor Objection to Settling Joint Accounts
Creditors may give you a hard time about settling joint accounts. The purpose of a cosigner is so that there’s always someone on the hook for the debt if one party becomes unable to pay the debt. When you, or your debt settlement company, approach a creditor about a joint debt, they’ll likely deny your request and instead pursue the joint cardholder or cosigner for the balance. Meanwhile, both parties are still expected to pay and the debt continues to be reported on both parties’ credit reports.
Salvage That Account?
Can you keep up the minimum payments on just that joint account? This may help you save the account from settlement and salvage your personal relationship with the joint account holder. Note that other creditors could use (more…)
When you can’t afford to pay your taxes in full, one of your options is to enter a payment plan or installment agreement with the IRS. An installment agreement typically lets you pay off your tax debt over a period of time and avoid the extra interest and penalties you might be charged if you waited.
Fees for an Installment Agreement
The IRS charges a fee to set up an installment agreement. The fee is $105 if you plan to send your payments to the IRS but you can lower it to $52 if you let the IRS withdraw the payments from your bank account. You may be able to get a reduced fee of $43 if your income is within certain levels.
How to Set Up an Installment Agreement
You can set up your installment agreement online if your tax debt, including penalties and interest, is equal to or less than $25,000. You don’t have to wait until you get a bill from the IRS to set up your payment agreement. But, if you’ve already received a bill (more…)
After debt settlement, you should quickly get started repairing your credit. Before you jump right into credit repair, make sure you get some essential information on improving your credit.
Your credit report contains the details about what you need to do to improve your credit score. The negative information on your credit report is what brings your credit score down. The first thing you should do to repair your credit is check your credit report. Make a list of the things that are hurting your credit score and figure out what you can do to improve that information.
One of the easiest steps in credit repair is to dispute inaccurate information. Errors could hurt your credit score, especially errors in how your debt settlement is reported. Check every item on your credit report to make sure everything is correct. If you find anything that’s wrong, dispute it with the credit bureau.
Your credit score is based on five different factors: payment history is 35%, amount of debt is 30%, age of credit history is (more…)
For the past few months we’ve all been inundated with news articles detailing how the United States is drowning in debt — and even with the most optimistic figures, we’re not quite sure it’s something we’re going to be able to dig ourselves out of. Similarly, many Americans currently find themselves in a situation where life’s expenses have gotten out of control and making minimum payments on credit cards provides no progress in paying down their debts. Though the figures vary greatly, it appears that the main situational difference between the federal government’s fiasco and the citizens of America is that the government has a plethora of revenue sources, whereas the working-class heroes who literally built this great nation’s economic empire are limited to one or two employment (or unemployment) checks each month.
It’s a testament to the resilience of the American working class that between rising prices for basic necessities like housing, food, clothing and gasoline we still have enough left over to make payments on our various debts. So, it may come with great surprise that there is a debt solution out there that many people are utilizing to settle their unsecured debt without feeling like they’ve been backed into a corner and forced into filing for bankruptcy. The process is known as debt settlement, a totally legal and legitimate approach to negotiating an amount that your creditor will accept where the debt ultimately shall be considered paid in full.
Like many delicate financial decisions in life, selecting the right debt settlement company with the experience and proven track record could make all the difference in the world in how much of your debt can be relieved. Individuals who attempt a settlement on their own may lack the tools and knowledge to achieve maximum results from the process, so it’s probably best left in the hands of those with proven track records.
DebtSettlement.com prides itself in being a leading resource for information on the subject and takes great joy in helping people get their financial lives back on track. So if you’re living paycheck to paycheck and feeling hopeless, educate yourself with our short video on the potential benefits and requirements of the process or just go ahead and give one of our advisors a call at 888-296-0693 for a free consultation as your first step toward a potentially better financial future.
Though it may not seem like it, settling your debts was a big step into getting your finances back on track. Remember, you decided to go through with debt settlement because your debts were likely wreaking havoc on your finances. By taking steps to get debt free, you also took a huge step in getting your finances in better shape. Now there’s a little more work you should do.
Resume contributions to your retirement plan. If you stopped your automatic 401(k) deductions so you could save up for debt settlement sooner, contact your human resources department to find out what you need to do to restart these contributions. Saving up for retirement is important since you want to make sure you have enough money to survive when you decide to stop working.
Create an emergency fund. An emergency fund can be critical to keeping yourself out of debt. Lots of people end up in debt because they had an unexpected emergency and didn’t have the liquid assets available to pay for it. Start putting money in an emergency fund every month until you’ve accumulated about six months of living expenses. It may take several months or even years to build the ideal emergency fund and that’s ok. Even smaller emergency funds could come in handy when you need to pay an insurance deductible or cover a medical bill.
Update your budget. If you don’t already have a budget, create one now. In fact, you can do this long before you ever start debt settlement to figure out how (more…)
Up until last year, debt settlement scams were rampant, which is why the Federal government amended laws for most companies that provide debt relief services. Just because laws were amended doesn’t mean every company out there will follow them. Some companies look for loopholes or disregard the law completely. So it’s important that you do what you can to protect yourself from being ripped off.
Don’t pay upfront. Most companies running scams want to get as much money from you upfront as possible without providing any services. This is why the amended law prohibits most companies from collecting a payment upfront. Some companies have a lawyer front and tell you that you have to pay attorney fees, but sometimes this is a scam too. The rule of thumb you should follow is that you shouldn’t pay for a company’s services until they’ve actually provided the service.
Check with the Better Business Bureau. Research the background of any debt settlement company you’re considering. The Better Business Bureau is a great place to start because many consumers go here when they need to complain about a debt settlement scam. You should stay away from debt settlement companies that have lots of (more…)
There’s another breed of debt relief companies you may encounter as you’re trying to figure out what to do about your debt – debt negotiation companies. Unlike debt settlement firms, debt negotiation companies don’t promise to help you pay off your debts completely. Instead, these companies typically say they can help you get a lower interest rate or monthly payment on your credit cards by negotiating with your credit card company. Of course, they charge a fee for this service.
Some debt negotiation companies have called consumers on the Do Not Call list. These debt negotiators may say they’re from “Card Services” or something similar making it seem like they’re affiliated with your credit card issuer, when they’re actually not.
Drawbacks to Using Debt Negotiation Companies
Many consumers have had several problems with debt negotiation companies. The debt negotiator may reduce the cardholder’s interest rate by negotiating an accelerated payment plan that requires higher monthly payments, payments the cardholder may not be able to afford. Or, the debt negotiation company, after collecting a fee, comes back to the cardholder saying the creditor did not agree to a reduced interest rate. The company would then refuse to refund consumer’s money because they’ve technically kept up their end of the deal – to offer a lower interest rate to the creditor.
Like some other debt relief related companies, debt negotiators typically don’t (more…)
One of the complaints debt settlement customers have made in the past is that the process took so long. Prior to the debt relief laws that now prohibit upfront payments for many debt settlement companies, debtors would often pay into a debt settlement program for months and never see any progress. Meanwhile, their accounts were getting more and more delinquent and calls from creditors and collectors were likely increasing. Consumers who choose to go the debt settlement route should have a clear understanding about the timing of debt settlement.
How fast you can settle your debts largely depends on three things: how far past due your accounts already are, how fast you can come up with the money to settle your accounts, and the creditors’ willingness to settle. This is true whether you settle your accounts through a debt settlement company or if you settle accounts on your own.
Why Being Past Due Matters
Debt settlement is typically close to impossible on accounts that are current. Why would a creditor want to settle an account that’s current on all the payments? These accounts still have a potential for making money. An account that’s more than 90 days past due, on the other hand, is at risk of default and many creditors would rather collect something on those accounts, even if it’s not the full balance.
If all your accounts are current at the time you decide you want to settle, it will likely take at least (more…)
Many people want to get rid of their debts one way or another to keep creditors from taking them to court over debts. It doesn’t matter whether you owe $100 or $100,000, creditors can sue you for the amount you owe, if they deem it necessary. Don’t assume a creditor won’t sue you because you only owe a small amount. You may be unpleasantly surprised.
Background on Debt Statute of Limitations
If some of your debts are really old, state law may forbid the creditor from properly filing a lawsuit against you. But, it’s up to you to prove the statute of limitations has passed on your debt if the creditor sues you.
The statute of limitations varies by state. It’s typically between 3 and 6 years. Your state may also have a different statute of limitations on different types of debt, for example, credit cards may have a different statute of limitations from secured loans. The statute of limitations usually runs from the last date of activity on the account. Activity doesn’t necessarily mean payment. It could be as simple as stating that you owe the debt. Your state’s law defines when the statute of limitations starts running.
Note that the statute of limitations on (more…)