See if settling your credit card and other unsecured debts for much less than what you owe is the best solution for you. At Americor, we’ll review your situation and discuss all your options to a debt free future.
There are plenty of ways to approach your debt situation. For some people, the best option is a negotiated settlement with creditors to see if an arrangement can be reached. In such an arrangement, instead of continuing to make many minimum monthly payments for many years and even decades, you agree to pay a single lump sum that is less than you would otherwise owe your creditors. In exchange, the rest of your debt is forgiven.
Debt settlement can be viewed as a win-win for both the beleaguered debtor looking for debt relief and the creditor who might otherwise not receive any type of payment whatsoever except for a negotiated deal. The key to a successful settlement solution is working with a debt relief company that you can trust.
When you are ready to take control of your debt, and you think that a debt settlement solution is the best course of action, reach out to our team here at Americor Financial to discuss your potential options. We’ll discuss the best debt solution plan for your individual situation and craft a plan that works for you.
Known as debt settlement plans, these debt strategies seek to negotiate a settlement with your creditors to get them to accept less than the full amount you owe in exchange for immediate payment of a lesser sum.
When it comes to collecting on credit card debt, creditors look to “creative” solutions when it becomes evident that you will be unable to meet your obligations. This creative approach is known as a debt settlement, which allows you to settle credit card debts and other unsecured debts for less than the current outstanding balance. While the deal can be structured in various ways, one such plan might feature paying half the owed amount in a lump sum. From the viewpoint of the credit card companies, it’s the same philosophy behind the old fishing adage to cut bait if it looks like you are about to lose your “financial rod and reel”.
If you are in such a dire financial situation where you begin to think that bankruptcy is a viable option, debt settlement can be attractive. However, all things come at a cost, and when that cost includes bankruptcy, it’s especially important to make sure it’s worth it before diving in.
A good company will negotiate your debt to around half of what you currently owe.
Debt Settlement Pros
A debt settlement pros and cons list begins and ends with one powerful “pro”: You can stand to save large amounts of money if you can strike a deal with your creditors. For instance, say you owe $28,000 in credit card debt and you successfully negotiate a $15,000 settlement, you effectively save $13,000 immediately.
Debt Settlement Cons
You might pay high fees to the settlement company which reduces your savings. You might owe taxes on the $13,000 because the I.R.S. views such reductions as income depending on your state regulations. Your credit report will get damaged from late payments, closing accounts and lowering your credit ceiling.
If you are wondering whether a debt settlement agreement will have a negative effect on your credit standing, the answer is yes. A debt settlement notation can be damaging to a credit standing. It can stain your credit report for quite a while. Clearly, a typical debt settlement approach should only be considered by those who already suffer from a poor credit score. And not someone planning to make a big purchase in the near future.
The notation will read, “Paid less than total amount owed.” So it is best utilized only when the savings are substantial. But for debtors who already have poor credit, this wouldn’t be a major concern.
Simply stated, with help from a credit resolution company, you would negotiate with your creditors to reach an agreement whereby you would settle your debts for far less than the outstanding balance.
Credit card debt programs are an excellent way to discharge large debts at less than their face value, but the effort comes at a cost to your credit rating, and you run the risk of getting scammed by fly-by-night operations.
Debt settlement programs are avenues to reduce your total unsecured debt, but if you end up getting scammed, your best laid efforts will result in failure. As such, it is important to know who you are working with when entering into an agreement with a debt settlement company.
Towards that end, watch out for warning signs and do your due diligence which should include:
As such, it is important to know who you are working with when entering into an agreement with any debt settlement company.