Debt Settlement FAQ
Debt Settlement FAQ
What types of debt can be settled?
Debt settlement companies handles unsecured debts only, like credit cards and not secured like loans (student, mortgages or any government issued loans), legal obligations (alimony and child support) and medical bills.
Can a consumer settle debts on their own?
Definitely, however, it is not easy to negotiate with creditors. There are a few things that consumers should know regarding creditor tendencies. There are those that are very aggressive with collections that they'd threaten to take legal actions against clients for a couple of months of non-payment. But there are also some that passes the deliquent accounts on to a third party collection agency.
Debt settlement companies know about these characteristics well because they work with them on a regular basis. But that being the case, a confident and well-informed consumer can settle on his own, just as well.
Is debt settlement right for everyone?
No, it is not.
Professional debt settlement programs have a $10,000 or more (overall balance) requirement and a preference for past due accounts. Consumers must understand that debt settlement is one of the more aggressive approaches to being debt free and it has an desperation ring to it, hence the high balance requirement, because otherwise, consumers can opt for a debt management plan instead. Or just undergo credit counseling, have the counselors help with coming up with budget plan, and try to reduce debt d.i.y.
One more thing about "desperation" - debt settlement is a very good alternative to bankruptcy and it also has a fast completion time (3 years or less).
Can debt settlement companies guarantee a successful program?
No, and anybody claiming so is commiting a blatant lie.
There are no guarantees when it comes to money, especially debt relief, as whether or not the creditor will accept a settlement can only be known once a proposal has been pitched them. However, once the creditor accepts what the program offers, it's up to the consumer to stay with it until it's done.
Do debt settlement companies offer a "money back guarantee?"
Yes, there are some debt settlement companies that offer a money back guarantee once they've determined that a settlement is not possible.
What can consumers expect with a debt settlement program?
Reduced monthly payment and the prospect of being debt free in 3 years or less. However, creditors differ, and the actual amount that they have agreed upon can may change along with how it's going to reflect on the credit report.
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