Private Debt Settlement Companies charge a fee between 15% and 25% of the debt that the company was originally asked to settle or a lesser amount.
You will be asked to stop paying your creditors after you have reached an agreement with a Debt Settlement company. The company will assists you to not make more payments. These payments go into an account in escrow and include the company fee. The company will work with creditors to negotiate a lower amount. After you have paid the agreed amount into an escrow account the debt settlement company will pay the creditor. This process could take up to 2 years.
As the debt Settlement Company negotiates, late fees, additional interest, and credit score damage can build up. This can cause severe credit score damage. Many people leave a debt settlement agreement after not settling their debts.
Which Debts are eligible for debt settlement?
The majority of unsecured debt can be settled if the creditor agrees. A creditor does not have to accept a settlement offer.
Unsecured debt can include credit card debt, personal loans, and medical bills.
The Not eligible types of debt are:
- Secured debt such as a mortgage or car loan
- Student loans
- Invoices incurred by your company or self-employment
- Tax debt
Before you agree to a debt settlement firm, make sure the debt that you are interested in settling is eligible by looking at the websites of the Federal Trade Commission and Consumer Financial Protection Bureau.
Is debt settlement worth?
Although debt settlement can have its downsides, it can be a great option for those with good financial circumstances. It may be a good option for those who owe large amounts to one creditor. It’s worth looking into if a creditor will accept half of the amount you owe to settle a debt you are unable to repay.
Before agreeing to a debt settlement, it is important to weigh all the pros and cons.
Benefits of Debt Settlement
There are many benefits to debt settlement:
- Sometimes, the balance owed can be reduced by up to 50%
- For those who can pay the settlement amount, it’s a way of avoiding bankruptcy.
- After the debt is paid, collectors and collection agencies cease calling.
Why work with a Debt Settlement agency
Sometimes a person’s debt can get so high that they can’t pay them off. There are often good reasons for debt, such as a reduction or layoff in pay, large medical bills or an emergency expense. It can be hard to get out of debt, no matter the reason. This is especially true for Settling Credit Card debt and other revolving debts that don’t seem to decrease even though you pay monthly.
Global Advisory Debt Settlement can be a viable option, but, as you have read, it must be approached with caution. A debt settlement company may be able to negotiate with creditors to pay less than you owe. It is important to approach it carefully as a debt settlement company might not be able to solve your problem. They may even make you worse off.