Debt relief settlement programs, offered by credit counselors, volunteer agencies and attorneys, can help you repay your debts at an affordable rate. Under these programs, typically you seek help through a credit counseling agency or other debt assistance provider, and after establishing your income, expenses and how much you owe, the debt relief settlement counselor negotiates affordable repayment arrangements with each creditor. Once all of the negotiations are confirmed, you'll sign a contract and agree to pay a specific amount to your debt relief assistance organization as scheduled. They will pay your creditors and handle any communications with them for the duration of your settlement plan..
Paying Money to Save Money
Debt relief settlement providers can negotiate settlement terms with creditors that are not typically offered to individuals. Charges for debt relief settlement can vary according to the type of service being offered, your income and how much debt you owe. Nonprofit credit counseling agencies may use a sliding scale to determine their fees based on your income. Other services may charge a flat fee, and if you engage the services of an attorney or financial professional, hourly fees may be charged. Before signing any contract for debt relief services, make certain you understand exactly how much the service costs.
Debt Relief Settlement Terms
Debt settlement relief programs can provide affordable repayment terms using different settlement options. They may negotiate reductions in interest rates and those expensive extra charges that can add to your balances, while late fees and over-the-limit fees may be waived. In severe cases, creditors may agree to reduce some of the debt amount, too. The exact terms of debt relief settlement agreements depend on individual circumstances and your ability to repay what's owed.
Third Party Mediation
Once you agree to use a debt relief settlement program, your debt relief counselor will act as an intermediary between you and your creditors. The collection calls will stop. You won't have to think of excuses for not sending payments, but you will have to abide by the terms of your debt settlement agreement. If you fail to pay your debt settlement company, your plan can be terminated, and the collectors will start calling again.
Considering All Aspects
Debt relief settlement can help you regain financial solvency and establish a cash-based budget, but it is not a cure-all.
You'll be asked to close your credit card accounts. Creditors typically require this as a condition of their approval of your debt settlement plan.
You'll be sending money to your debt relief settlement provider and trusting them to pay your creditors. Your debt relief settlement provider will handle all communications with creditors during your repayment plan.
If you missed payments or had a repossession, judgment or foreclosure before seeking debt relief settlement help, this information cannot be removed from your credit history.
Payments made according to your settlement plan are reported to credit bureaus as "paid as agreed" by your creditors.
It may be difficult to open new credit accounts after completing a debt settlement plan. Debt relief settlement providers cannot guarantee that you'll be eligible for credit after completing their programs, as negative credit information can remain on your credit reports for 3 to 10 years.
Avoiding Foreclosure and Bankruptcy
Debt Relief Settlement can be an attractive alternative to losing your home to foreclosure or filing bankruptcy. As legal proceedings that are matters of public record, foreclosure and bankruptcy can appear on your credit reports for 7 to 10 years, and your credit scores will be lowered accordingly.
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