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 three months to settle your accounts. That’s typically the earliest point that creditors will entertain settlement offers. Even then, some creditors will refuse to settle your accounts until they’re closer to charge-off which happens at 180 days past due. Still, there are some creditors who won’t settle at all, even the day before a charge-off.
Having the Settlement Funds
Settlements generally need to be paid in full within a few days after a settlement offer is accepted. That means you need to have access to the money as soon as possible. You can settle your accounts faster if you already have a lump-sum of cash you can use for settling your accounts. But, this isn’t the case for many people. Instead, you may have to set aside money every month to come up with what you need for settlement. And if you’re using a debt settlement firm, you’ll also have to come up with the money for the firm’s settlement fee.
The more you can afford to put aside every month, the faster you can probably settle your debts. But, if your ability to save up for a settlement is limited, settlement could take several years. Some debt settlement firms won’t take you as a client if you can’t settle your debts within a certain amount of time. Others will gladly accept you for the prospect of earning money from you.
The amount of time it takes to settle an account varies from one person to another. You can usually settle your accounts faster, if you can come up with between 40 and 60% of your outstanding balances within a few months.
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