People seldom, if ever, happily choose to declare bankruptcy. They are usually in such a financial turmoil that there are very few other choices to rectify the situation. Debt settlement is new on the debt solution horizon and is causing many to consider it an alternative to bankruptcy. While choosing to settle your debt is a viable option, I would like to offer a few words of advice should you decide to take this route to resolving your outstanding debt.
What is debt settlement? It is basically a pay-off plan that you negotiate with your creditors. The reason it has become so popular is because you don’t have to pay the full balance due on your accounts. What would you say if I told you that you can easily lower your debt by as much as 60% or more? You would probably jump at the opportunity, right? This is the promise that debt settlement companies make.
On your behalf, a debt settlement company negotiates with your creditors, a pay-off amount that is less than the total amount you owe. Yes, the amount can be as significant as 60%, but it all depends on your situation.
Being in debt does not automatically make you a prime candidate for debt settlement. Most companies have a set of criteria that they use to accept or reject prospective clients. Some companies may require that you have a minimum dollar amount of debt (usually $10,000). These requirements are not to discriminate against clients, but rather to provide a guide for those that are likely to be the most successful. Other measurements of success in the program include length of time of debts, type of debt (unsecured vs. secured), your income, and employment status.
Does your situation have you considering bankruptcy and do you feel you would meet most criteria? If yes, before you anxiously start searching Google for debt settlement companies, let me offer a few words of advice. I’m sure I don’t have to tell you that there are a significant number of reputable companies that offer debt settlement services, but there are just as many that simply want to take your money. Sifting through the scam artists to find a trustworthy company isn’t difficult, but you’re going to have to do your homework.
One thing you can count on for sure with shady companies, is that they will not affiliate themselves with any legitimate organization. They know what they are doing isn’t ethical and so they want to be sure they steer clear of getting caught. Reputable debt settlement companies are usually affiliated with reputable organizations such as the Chamber of Commerce and Better Business Bureau.
There are other factors to consider when searching for a reputable company that offers debt settlement services. How much does the company charge for their services? In most cases, companies will usually charge a small percentage of the total balance you owe up front. Others may offer monthly payments. Consider your financial situation and determine which is best for your budget. I offer a word of caution when communicating with companies that provide debt settlement services: no one can guarantee that a debt settlement will be successful.