Debt related settlement/negotiations

Debt related settlement/negotiations

If you are struggling with your finances, maxed out on your credit cards, and can’t afford to pay all your bills, you might consider reaching out to your lenders to see if you can settle all or a portion of your debt. IF YOU DON’T WANT TO ATTEMPT TO SETTLE YOUR DEBT ON YOUR OWN THEN YOU CAN RETAIN AN ATTORNEY TO ASSIST YOU IN SETTLING YOUR DEBTS.

Settling a debt or debts can relieve you of some of your obligations, but there are also downsides to consider, such as how it may affect your credit score.
Debt settlement is an agreement between a lender and a borrower in which the borrower repays a portion of a loan balance, and the lender forgives the remainder.

You may need a significant amount of cash to settle your debt. Some creditors will accept a significant downpayment and monthly payments on the balance, but most want all the monies up front.

Consider starting the negotiations by offering to pay 35% or 45% of your outstanding balance in return for forgiveness on the rest. Typically, Creditors today will settle for about 65% but you want to always start lower.

Debt settlement can negatively affect your credit score, however not paying the debt at all will most likely affect your credit score even worse.

Lenders are not legally obligated to lower your outstanding debt, but because they want to protect their bottom line, they may agree to a debt settlement to avoid taking an even greater loss.

Once you’ve finalized your debt settlement with your lender, get the agreement in writing. If a credit card company only verbally agrees to a debt settlement, it can still legally turn over the remaining balance to a collection agency, which can have a larger impact on your credit score than a settlement.

Although a debt settlement can take some of the pressure off you, there are risks and downsides to consider.

First, a debt settlement will affect your credit score. That will make it more difficult for you to get credit or good interest rates in the future. A debt settlement will typically remain on your credit report for eight years and you cannot remove it before then. On the plus side, settling a debt will have less impact on your score than failing to pay completely.

Subscribe Your Email for Newsletter & Promotion