5 Things Not to Do During Debt Settlement

Written By Naazma Garcia
Apr 18, 2022


There is nothing as financially destabilizing as finding yourself in the grip of ever increasing debt. Life often gets in the way of our plans to pay off our debts, and we become trapped in a debt spiral as our interest payments increase our debt to unmanageable levels. Check out our article on the impact of credit card debt.

Debt settlement is a strategy that enables debtors to pay a sum that is typically less than the amount you currently owe. This is done through third party agencies who negotiate on your behalf and guide you through the process.

If you are considering debt settlement, there are some things you should definitely keep in mind to ensure the process plays out smoothly and allows you to get your financial life back on track.

1. Don’t Close Cards with a Zero Balance

There are valid reasons to close a credit card like avoiding high annual fees, avoiding potential fraud, or if you’ve gone through a divorce or separation. However, closing cards with a zero balance is typically a poor financial decision for several reasons.

First, your credit utilization will go up. Your credit utilization ratio is determined by how much of your total available credit you’re using. When you close a credit card with a zero balance, you’re increasing your utilization percentage by reducing the amount of available credit from the ratio.

Second, having a long history of good credit helps build your score, so if you cancel an old line of credit, your credit score may take a hit.

2. Don’t Apply for New Credit Cards

Applying for a new credit card can negatively impact your credit score by reducing the overall average age of your credit accounts. Furthermore, simply submitting an application for a new credit card can hurt your score, and credit card churning, which is the act of frequently opening and closing credit accounts to take advantage of promotions and discounts, can be particularly devastating to your credit score.

In short, you shouldn’t increase your debt with new credit cards while you are trying to settle the debt that you already owe.

3. Don’t Stress Over Your Creditworthiness

Your creditworthiness helps lenders determine the likelihood that you will default on your debt. While these tips can help mitigate any negative impacts to your credit score, it’s important to remember that you need to eliminate the debt you have now before you start worrying too much about improving your creditworthiness.

4. Don’t Skip Monthly Deposits

When you participate in a debt settlement program, you are hiring a third party to negotiate with your creditors to settle your debt for less than its current value. With debt settlement programs, you typically make monthly deposits that go toward paying off your debt. If you skip paying these monthly deposits, you may be removed from the program. Debt settlement only works if you consistently make your monthly payments.

5. Don’t Withdraw from the Program Early

It is possible to withdraw from a debt settlement program early, but it is ill advised. You will still need a plan to pay your debt, only now you won’t have a partner to deal with your creditors, negotiate a lower debt payment, and guide you through the process.

The most important factor in debt settlement is the third party debt relief agency you choose to work with. Americor is a trusted consumer credit and debt relief solution company offering debt settlement programs that will help you take back control of your financial life. Contact a certified debt consultant today to receive a free debt analysis and to learn more about our debt settlement strategies

Click here to apply: https://apply.americor.com/new 

Read our article on debt collectors: Know your rights when dealing with debt collectors

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Americor provides debt solutions to thousands individuals and families all over the country. We’re a next-generation debt relief company with a proprietary platform designed to help clients get out of debt quickly. Together we’ll develop a strategy for you to enjoy a debt free lifestyle. Learn more about how Americor can help relieve the burdens of debt today.

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We provide debt resolution services. Our clients who make all monthly program payments save approximately 40 – 50% of their enrolled debt (average of 43%) upon successful program completion, before program fees. Fees are based on a percentage of your enrolled debt at the time of starting the program and range from 15%-25% of your enrolled debt. Programs range from 20-48 months. Clients must save at least 25% of each debt due to an enrolled creditor before a bona fide settlement offer will be made. On average, clients receive their first settlement within 4-7 months of enrollment and approximately every 3-6 months thereafter from when the prior debt was settled. Not all Clients complete the program. Estimates are based on prior results and may not match your results. We cannot guarantee that your debts will be resolved for a specific amount or percentage or within a specific timeframe. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting, legal advice or credit repair services. Our program is not available in all states; fees may vary by state. Some programs may be offered through The Law Firm of Higbee & Associates d/b/a Advantage Law. The use of debt resolution services will likely adversely affect your credit. You may be subject to collections or lawsuits by creditors or collectors. Your outstanding debt may increase from the accrual of fees and interest. Any amount of debt forgiven by your creditors may be subject to income tax. Clients may withdraw from the program at any time without penalty and receive all funds from their dedicated account, other than funds earned by the company or fees paid to third-party service providers, as may be applicable. Read and understand all program materials prior to enrolling. Certain types of debts are not eligible for enrollment. Some creditors are not eligible for enrollment because they do not negotiate with debt relief companies. To determine the offers you may be eligible for, Americor conducts a “soft credit pull.” This credit pull does not impact your credit score, creditworthiness, or ability to obtain credit from other sources. The soft pull is not a tradeline entry, it does not report against your score and will only take a few minutes.

Americor Funding, LLC (18200 Von Karman Ave, 6th Floor Irvine, CA 92612) is fully accredited by the Better Business Bureau (BBB), the American Fair Credit Council (AFCC), and the International Association of Professional Debt Arbitrators (IAPDA). CA Department of Financial Protection and Innovation (DFPI) License # 603K913.

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