Will Debt Settlement Work For You?
Debt settlement will allow you to satisfy your debt at a fraction of the balance owed. The settlement can be paid in a lump sum, or often through payments. This type of service is generally offered through third-party companies that can reduce your debt by negotiating a settlement with your creditors. To know if debt settlement will work for you, you want to understand the process.
How Debt Settlement Works
A company that specializes in debt settlements is known as a ‘debt adjusting’ or ‘debt relief’ company. These companies offer to contact those who are in debt in an attempt to reduce your debt through negotiations or have them accept a better payment plan. There is a fee attached to these services which is often a percentage of the amount you would save by using the company. There is no ‘one-size-fits-all’ when you are looking for ways to settle your debts, which is why there are different types of relief to choose from.
Different Types of Debt Relief
- Debt Consolidation
- This method will combine multiple debts into one single account. Instead of making multiple payments, you will only make one monthly payment to a new account.
- Credit Counseling
- A credit counselor helps you with your budget, debt management, money management, and your credit score. This type of service is generally offered by nonprofit organizations, but not always, so you should check with the counselor before work begins on your debt.
- Debt Management
- Credit counselors typically offer or suggest that you use a debt management plan. This is where you enroll in a plan to make a single payment to a credit counseling service. With this option, your debt is not reduced, but your interest rate may be lowered. Part of entering into this plan means you agree not to apply for any new credit until you’ve settled the debt in the plan.
- Debt Forgiveness
- With debt forgiveness, your lender erases a portion of the debt you owe. You will want to work with a debt settlement company to work with you on negotiating a lower lump-sum payment to pay your debt in full.
When you are working with a debt settlement company, you may be told not to make payments to your creditors until they’ve reached agreements with them. To know if this type of program will work for you, there are benefits and risks to consider.
Benefits of Debt Settlement
These are the pros for using debt settlement:
- Debt settlement will help you avoid bankruptcy
- You will lower the amount of your debt
- Collectors and creditors will stop contacting you
These are the pros, but there are also risks or cons for using debt settlement:
- Not all of your creditors may agree to negotiate the amount you owe them
- There is the possibility the amount of your debt forgiven will be considered taxable income. Talk with your tax preparer to learn if this amount will offset your savings
- When it is suggested that you stop making payments, it could impact your credit score
If you are looking for a debt settlement company, contact NuLeaf Financial. This is a risk-free consultation with experienced advisors who can help you get out of debt.
Where to go for Debt Settlement
NuLeaf Financial is committed to accelerating your path to a debt-free life. Our devoted team will work with you in your debt settlement to find you relief in as little as twelve months. Talk with one of our counselors to assess your financial health and then personalize and execute a plan for your debt settlement.