The Debts That Debt Settlement Can't Solve

Sometimes in life people find themselves so far in debt that they do not see how they will ever be able to get out. The circumstances surrounding the debt can be from a variety of reasons from overspending to loss of a job. Some people decide that debt settlement is their best option, meaning they pay an agreed-upon amount that is less than the actual debt. You cannot settle every type of debt.

Student Loans

Student loan debt cannot be settled. If you are having problems paying your student loan, call the loan holder to discuss this. The organization will probably be willing to make payment arrangements, reduce your monthly payment or even defer a few months of payments if necessary. Your interest rate on student loans is usually much lower than credit cards, and the people holding the notes are usually much nicer and willing to work with you as long as you hold up your end of the bargain.

IRS

If you owe back taxes and plan on trying to settle, do not bother. The IRS will work with people as far as setting up payments plans and are usually fairly open to what you can afford to pay each month, especially if you call them right away and explain your situation. Depending on the amount of taxes you owe, they may let you pay only $25 per month if that is all you can afford at the moment.

Mortgage

Since a mortgage is a secured loan, you cannot settle this debt. Here again, many times your mortgage holder will work with you to help you make your payments. They might defer your interest and tack it on at the end of your debt. Or they might defer a certain number of payments if you are out of work but know for a fact that you will go back after a certain amount of time, such as with a seasonal layoff. You will probably have to give them a lot of information, including all the money you spend on everything in your household each month, even things like groceries and gas.

Child Support

Back child support is another debt that you cannot settle since this is a court-ordered payment. If you are having trouble keeping up with your child support (or alimony) payments, hire a lawyer to go to court with you and explain exactly why you cannot pay. The result may be a lower amount for future payments, but you will still have to pay what you already owed.

Utilities

Utility company debts cannot be settled. Call and make payment arrangements with the particular utility company that you are having trouble paying. If you have a utility bill that greatly fluctuates, ask about a payment option that allows you to spread your payments out over the entire year. For example, if you heat your home with natural gas and the winter payments top 500 dollars a month in the winter, but drop to 50 dollars in the summer, ask for the monthly payment plan to even out your payments over the year. Often the last month of the year will be very small or actually give you some credit for the next month.