When Should You Settle Your Debts?
Debt settlement is huge today. The television, radio and internet are full of their advertisements. And boy do they make it sound like they are the answer to all your prayers. I do not recommend using these companies, but that does not mean that debt settlement as a debt relief option does not have its place. You just have to know when this debt elimination option is right for you and then you need to perform the negotiation process directly with your lender.
Debt settlement companies charge fees to be enrolled in their program as well as a percentage of the money they save you on each balance. This money would be better spent paying off your debt than paying a company for a service that you can perform on your own. With all that being said, when is debt settlement right for you?
This alternative for debt reduction is a last resort before bankruptcy. So, if you are feeling the pinch but your debts payments are current, this is not the option for you. You should talk to a credit counseling organization, if your payments are current, but you feel you need help. Most lenders will not even considering settling debts that are current. If your debts are current, there is no incentive for them to negotiate with you.
The time to think about settling your debts is when you are behind on your payments and feel there is no way that you can get caught up. Before flying into the negotiation process you want to talk to your lender and see what hardship programs they have available. If you decide to go ahead and settle, you will talk directly to the lender.
Many lenders have a length of time that must pass before they will negotiate and it varies from lender to lender. Some will settle at three months and others will not do it until nine months have passed without a payment. If you have received a notice that you are being summoned to court over an outstanding debt, this is the perfect time to negotiate a settlement.
Debt settlement is not right for every situation, but if you are at the point where you have not made payments for several months and you are considering bankruptcy, you want to see if you can settle your debts. If you can, you will eliminate the stress that much more quickly.
by: Marjorie Salada
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