Debt settlement is easy to understand: It’s the process of negotiating with your creditors to pay back less than what you owe them.
Negotiating isn’t always so easy, though, and requires a good deal of patience.
But if you stick with it the rewards can be life-changing. A good debt settlement company can reduce what you owe by 30%. Sometimes up to 50%.
Short of filing for bankruptcy, debt settlement is considered the quickest and least expensive way out of debt.
As long as you’re still able to make at least 60%-70% of your minimum monthly credit card payments, it can save you a significant sum each month, and free you from debt in just two to four years.
But debt settlement is not without risk.
Negotiating with creditors can be like playing a game of chicken – if you lose, you can lose big. So a word of caution is advised.
To begin, patience is critical. Your creditors are under no obligation will negotiate with you, so don’t assume they will. If they agree to negotiate, be prepared to wait. It can take up to two years to reach a settlement sometimes. This is where a professional debt settlement company can prove invaluable.
Secondly, you must stop making your regular monthly credit card payments. You read that right: Full stop on payments. This can feel wrong to many people, even unethical. It is neither, and it’s critical that creditors understand you’re no longer able to pay or they’ll have no incentive to settle.
Thirdly, until your creditors agree to negotiate, you are contractually obligated to pay your debt. Stopping payments will hurt your credit score, not to mention leave you vulnerable to legal action against you by your creditors. So the risks are not insignificant.
But they’re not prohibitive, and any negative effects are likely not permanent. Your credit score, for instance, will initially decline after you stop making monthly credit card payments. But once your debt has been settled it will start to climb again. In six months it might even be equal to, or higher than, what it was before the settlement process began.
As a debtor, the chief advantage you have over creditors is that they prefer to get something back rather than nothing, and realize they’re likely to recover more through debt settlement than by referring your debt to a collection agency.
Just remember you’ll need patience and persistence in dealing with them, particularly if you intend to negotiate debt settlement yourself. Credit card companies have plenty of ways to discourage you with hardball tactics that cause the faint of heart to give up and file for bankruptcy.
Whether debt settlement is right for you depends on a few variables, such as your credit history and the urgency of your financial circumstances. But if you have the stomach for it, and you’re able to make at least 60%-70% of your minimum monthly credit card payments, a debt settlement solution has the power to make you debt-free within 24-48 months.
And that’s a whole lot better than filing for bankruptcy.
Level Financing’s credit counseling team invites you to develop a customized plan of attack for wiping out your entire credit card debt and lowering your monthly payments to a fraction of what they were – in a fraction of the time it might take for you to do so on your own.
To learn more, contact a Level credit counseling expert at 888.619.1770.