There are some special features in USA debt settlement. Just a few of consumers get their debt fixed with the first and final settlement. Every third of the debtors has over 75% of hoe debts settled within the term of 3 years. Still for those who enrolled in the program three years earlier or more only a bit over 11% have their debt fully settled. This means you shall be really careful about the choice of the company you’re ready to entrust your debts to.
Here are the features of the good debt settlement company:
- You will be shown all the fees and costs before you sign the papers;
- You will receive the information about how long the payments will take before negotiating with creditor;
- The manager will tell you which amount of money you need to save before the negotiation begins;
- The policies are written and easy to understand;
- Their in-house attorneys obtain perfect credit experience;
- All the resolutions are sent to your approval.
Here are the things the good debt settlement company will never do:
The results depend completely on the creditor, which means he might not make a deal and stay to its legal rights.
Accept the person who does not have financial problems.
Your Debt Settlement Plan
After you’ve come to some agreement, write down the arrangements. The agreement shall be signed by you and the creditor.
The first thing to do is to put the money on the account for further use in negotiation. The total amount will be told by the debt settlement company.
For several months you will be making the deposit into the defined bank account until you gather the needed sum. The account will be in your name, so you can easily withdraw the money in case of need. All the accounts are insured by the Federal Deposit Insurance Corporation (FDIC).
Negotiating Your Debts
You will have to follow the rules of the program and set aside the fixed quantity of money monthly. Once you gather enough of them the debt settlement agency will get a chance to use them in negotiation process. The debts get paid off after the successful negotiations.
Until the negotiations are final, you can say your word about the conditions. In any case it’s your debt and your money, so you can decide about the payment terms and reject them if they do not suit you.
The process of building up the funds can take about several months; still after it is done the actual negotiation begins. You will still be kept informed about the situation and will have a chance to approve or disapprove the offer.
When the negotiations are complete and end up with a good result, the account administrator will transfer the funds to your creditor. At this time you shall speak to the chosen tax professional in order to know if your forgiven debt can be considered as an income. This can happen in any case when the forgiven sum if over $600.
How Debt Settlement Affects Your Credit
Do not forget that to the moment you consider settling your debt your credit scores are already declined. The settlement process will give a drastic hit to your credit once again.
That is why it will be wise to talk to your credit card company if they can write in your credit history “paid in full” to give you chance for the next credits. In other case you will receive the mark “paid as settled”, which will stay in your credit history for the next seven years in USA.
Anyway your credit scores will move up if you’re keeping your finances in order after settling the debts.
If Creditors Won’t Settle
Most of the creditors understand that they can get more money through the debt settlement than if they reject the offer, since in this case the person can opt for bankruptcy and the creditor gets nothing at all.
That is why the debt settlement is a nice option in case your debts are unbearable.