When is Debt Settlement a Good Option?

Written By Naazma Garcia
Mar 21, 2022


It’s possible that you’ve reached a point where it’s just not possible to pay off your debt. Maybe you’ve been laid off or taken a pay hit, received a large medical bill or had an unexpected emergency expense. Whatever the reason, one option is debt settlement

Debt settlement may just be one of the cheapest ways out of debt, according to the American Fair Credit Council (AFCC). A 2020 report concluded that, on average, consumers saved $2.64 for every $1.00 fee assessed, and that over 98% of offered settlements resulted in a decrease in debt that exceeded client fees. 

The question then, is not whether debt settlement is an effective way to finally eliminate your debt, but whether it is a good option for you. 

How Debt Settlement Works

Debt settlement is a strategy used to resolve delinquent debt for a lower amount than you owe. First, you hire a debt settlement company. You will stop paying minimum monthly payments on your debt, and instead contribute a monthly payment to a dedicated savings account until there is enough for the debt settlement company to negotiate a settlement offer to the creditor for less than the amount owed.

The creditor may agree to the settlement offer because they know you can always file for bankruptcy, which could eliminate their ability to collect anything from you. So, they are often willing to accept less than what is owed through debt settlement. The debt settlement company will then facilitate payment to the creditor and collect their fee, and you have just eliminated your debt at a discount—a win-win-win. Read our article on debt collectors: Know your rights when dealing with debt collectors.

Benefits of Debt Settlement

Debt settlement is a viable solution for individuals in a pinch. It allows a debtor and their creditor to agree on a reduced repayment. Debt settlement offers might range from 10% to 50% of what you owe depending on the situation. Additionally, after a creditor accepts a settlement offer, the creditor is forbidden from harassing you for the money, and you can no longer be sued over the debt, as long as all payments under the offer are made timely. 

The report mentioned in the introduction of this article found the following:

  • Clients saw more savings the longer they participated in a debt settlement program, on average.
  • Three of every four debt settlement program enrollees settled at least one account within 4-6 months of enrollment.
  • On average, clients reduced debts of about $30,000 to $35,000 by approximately $9,500 after fees. 

We can clearly see that debt settlement offers an excellent path toward financial health, but is it right for you personally? 

Should You Try Debt Settlement?

Inability to pay your debt leads to a dangerous downward spiral: the longer you don’t pay, the more you owe, and the more you owe, the less able you are to pay. For individuals that are simply unable to pay off their debts, debt settlement offers a simple way out. If you decide to go with debt settlement, you should be wary of companies that guarantee a successful debt settlement for money upfront. This is typically a red flag for a scam. 

Should you decide that debt settlement is the right path for you to take, you can get in touch with a trusted consumer credit and debt relief solution company like Americor

Contact a certified debt consultant today to receive a free debt analysis. 

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

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About Americor

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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Address:
18200 Von Karman Ave, 6th Floor Irvine, CA 92612
New Clients:
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Existing clients:
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Phone:
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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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