Payday Loan Consolidation Benefits

If you have fallen into a payday loan debt trap, there are not many things you can do to get out of it. However, payday loan consolidation is an option. We have prepared a list of its advantages which may work for you. You may most probably like to consider using payday loan consolidation if you are eligible for a debt consolidation loan. It is probably what you need to take out if you have a lot of payday loans debt.

Payday Loan Consolidation Benefits:

1.   Reduces stress
Reduces stress

Reduces stress

It is a good solution to a long lasting problem. Payday consolidation loan is a known stress relief tool that has an almost immediate effect. You may not always notice it but constantly worrying about your upcoming payments makes you anxious. It may affect your personal relationships since being stressed affects the way you treat your loved ones. In addition, it can negatively undermine your performance at work. A workplace is normally a stressful enough environment. When you get the extra stress of having to deal with numerous debts, it is close to becoming unbearable. That is really unnecessary when you can easily get all this negativity removed from your life. You should consider taking out a debt consolidation loan and you will see the change in your day-to-day life.

2.   It is easy to achieve
It is easy to achieve

It is easy to achieve

Payday loan consolidation works in a simple way. All you need to do is take out a debt consolidation loan. It serves to pay off all your accounts with creditors or in other words, it is used to consolidate all your previous payday loans which you can’t repay. A debt consolidation loan can be used for other kinds of debt as well. Payday consolidation is still the thing you should do, even if you have a bad balance on one or more of your credit cards. That way you will repay the multiple debts and the only thing you have to manage is the debt consolidation loan. Although it is better not to owe anything, it is still a much better option to have just one debt than have several of them.

There is one major benefit of having a single debt. There is just one deadline, a single creditor and most importantly, a single monthly payment. You do not have to receive multiple calls from various creditors anymore and do not have to pay a different debt every day of the week.

Apart from worrying less and being tormented less by creditors, it actually becomes easier for you to repay this one payday consolidation loan. Why is that? It is because now you can focus on it. You can plan your budget as you know all debt payments ahead. On top of that, your monthly payments that are due may actually be much smaller since you may have a longer time to fully repay the debt consolidation loan.

3.   It is useful and strategic to lower your interest rates
It is useful & strategic to lower your interest rates

It is useful & strategic to lower your interest rates

It is one of the best things about payday consolidation loan – it can actually save you money. How does it work? Because you do not have multiple debts after you have taken a payday consolidation debt, there is only one interest rate now and that would be your payday consolidation debt interest rate.What you win by getting a payday debt consolidation loan is a more reasonable, lower interest amount. That not only save you money on your monthly payments but also throughout the whole duration of the loan. Besides saving from a lower interest rate, you also need to get strategic with your finances. It is very important to plan ahead. Being prepared with a solution is always a good idea.

4.   It stops calls from debt collectors
stops calls from debt collectors

stops calls from debt collectors

A debt collector is probably everybody’s nightmare. It is definitely the last thing you want in your life. If you did not manage to repay what you owe within 180 days from the original deadline,  you creditor will turn your account to a collection agency. That is when hell begins for you. You will be receiving multiple e-mails and letters and daily calls even at work and calls at night. A payday loan consolidation could be your solution to end all those harrassement. Take out a single loan to repay all those outstanding balances.

Tip: Check out what state regulations are imposed on debt collectors and make sure you know your own rights. Their actions are regulated by the Federal Trade Commission (FTC). There is a Fair Debt Collection Practice Act (FDCPA). It covers certain kinds of debt such as family debt, personal and even household debt. In some cases, creditors may be forbidden to call you between 10 p.m. and 8 a.m.

That will definitely help you get some much needed  sleep at night. Another thing is that debt collectors may even be forbidden to call you at work if they know that it causes problems at work and your boss opposes it. Make sure you do not give up too easily and do not make yourself an easy victim. The federal regulations apply to everyone, regardless whether it is a debt collection agency, a lawyer who provides such a service on a regular basis or the notorious companies out there that go and buy delinquent debt. Harassment (whether verbal or physical) and false statements are strictly forbidden.

5.   It improves your credit score
 It improves your credit score

It improves your credit score

We all know how important credit score is and how hard it is to maintain a good one. There are just so many things that can have a bad effect on it. Having unpaid debt is one of them. That is especially true when you make late payments. Having multiple debts makes the situation worse. You may wonder what payday loan consolidation has to do with it. Well, a lot. The more debts you have, the easier it is for you to fall behind on some payments. That goes immediately on your credit score (and stays there for about seven years).

Then your credit score gets worse and worse every month. There is a very simple fix to the problem – take out a payday consolidation loan, repay all your other debts and have them marked as paid. That improves your credit score. You also need to stay on top of your payday consolidation loan payments. Through taking a payday consolidation loan you can rebuild your credit score over time.

In a nutshell, a payday consolidation loan could help you in many ways. Not only will it help you reduce the stress levels in your life and improve your personal relations, it will also make it easier for you to stay on top of your single monthly payment. In addition to all of that, it will get you rid of debt collector’s calls and help you maintain a good credit score.If you are dealing with multiple debts and are finding it difficult to deal with the situation, payday loan consolidation may just be the answer to end your troubles.

Payday loan consolidation – PROs and CONs

Payday loan consolidation is a rather popular way for people to resolve the problems they have from payday loans. Payday loan consolidation is very useful and practical and comes with a lot of upsides. However, there are also some details you may consider as negative and want to be prepared or at least know more about them. Here is a list of the top ten things you need to know before taking up payday loan consolidation.

Pros of a payday loan consolidation

 

  1.    It comes without an advance fee
 It comes without an advance fee

It comes without an advance fee

An advance fee is a fee you pay before you have received any actual service. In payday consolidation loans and programs, you are supposed not to be asked to pay such a fee. And for payday consolidation loan debt settlement, it is prohibited for the company to receive a fee before it has settled any debt for the client. Even then, they can only receive a part of their fee for the amount of debt they have settled at that stage of the process.

That is a big advantage for you because it guarantees that the service you received is really worth the money you paid. There are many scam schemes where a loan consolidation company would request for an advance fee. After you pay, they disappear. Therefore, it is really good for you that you  pay only after the company has helped you settle some debts for you.

  1.    No more high interest rates

Payday loans have  one of the highest interest rates. That is because they are high risk loans.It is the same with credit card debt. However, there is a way out of this. When you use any type of payday loan consolidation, you will get a lower interest rate. Of course, there are various factors that will determine the exact interest rate.

Some of them include how many creditors you have, your outstanding debt amount, what actions have already been taken against you (for example, have you received a court summon or is your debt transferred to debt collectors, a garnishment on your wage or does your creditor take a certain amount of your paycheck with a permission) and how willing are those creditors willing  to negotiate.

Bear in mind the lower interest rate comes for the payday consolidation loan is because of its secured nature and its attachment to your asset. Payday loan consolidation is the only option to settle your debt that has this benefit.For example, payday consolidation loan debt settlement reduces the overall amount of your debt.

3.  There are no extra fees for being late on your repayments
 no extra fees for being late on your repayments

no extra fees for being late on your repayments

One of the biggest problems with payday loans is they not only come with high interest rates, they come with punishments as well. When you are late on your repayments, you get punished twice for it – once through the high interest rate and a second time through late payment penalty fee. That makes it extremely hard to repay a payday loan as its amount increases very fast to unbelievable amounts.

It seems impossible for you to ever repay it. That is exactly when you need to use payday consolidation. Payday consolidation loan, payday consolidation program and payday consolidation loan debt settlement come without any extra fees and without any extra financial penalties for late repayments. This is yet another reason to choose payday consolidation to get you out of the payday loan cycle.

4. Payday loan consolidation reduces the probability of you getting sued

You might wonder  how payday loan consolidation makes the chance of you getting sued smaller. Well, it is pretty simple. Once you have used payday consolidation relief, you would have repaid most if not all of your debts. You will not have multiple creditors and you will be out of the outstanding debts you have as well. Therefore, your previous creditor don’t have a reason to sue you anymore. Of course,  some of your creditors may have already started a court procedure and are unwilling to drop it.

In those cases, you can try to contact them and negotiate with them. Explain what repayment plan you have and see how they will respond. There is a pretty good chance they will agree to what you offer because court procedures are expensive (there are court fees and additional attorney fees that may vary) and there is the chance they may lose. Therefore, it is actually in their interest to receive whatever they can from you.

  1.    The calls from your creditors will reduce or stop altogether
calls from your creditors will reduce

calls from your creditors will reduce

The whole idea of payday consolidation is to reduce the number of debts you have. In fact, the goal is to reduce the number of creditors you have. People can be very difficult to deal with especially when there is money involved. Each creditor requires a different approach and offered different conditions on his debt. Therefore, it is extremely exhausting and overwhelming to try to deal with them. On top of that, there are several ways in which your creditors can come after you. Some may limit themselves to just calls and letter (and e-mails). Plus, they can get you in trouble with your boss if harassment happens during work hours.

In addition, another group of creditors may try to sue you or garnish your wage. All of those are not in your favor. Loan consolidation  can stop all these. Once you have repaid your multiple debts, all those annoying creators have no reason to bother you anymore. Even though some of them may continue to call, you now have the legal right to request them to stop. Finally, you will have some peaceful time without calls from creditors.

Bonus: Your payday loan consolidation company is doing (almost) everything instead of you.

When you sign up for a payday consolidation program or a payday consolidation loan debt settlement program, it is their job. Basically, the company will deal with your debt and your creditors while you just need to stay on top of the monthly payments you have negotiated with the company you have chosen to work with. Most importantly, those payments would take into account your actual financial ability.

Cons of a payday loan consolidation

1. You need to avoid payday loans in the future

It is way too easy to fall into payday loan cycle again. Be sensible and avoid payday loans as much as possible.

2. You need to follow your payday consolidation company’s advice
three payday consolidation options in front of you

three payday consolidation options in front of you

three payday consolidation options

There are in fact three payday consolidation options in front of you – payday consolidation loan, payday consolidation program and payday consolidation loan debt settlement.

Payday consolidation loan is like any other loan you would take and you just need to keep up with your monthly payments.
Then there is payday consolidation program. It offers a plan to help you manage  to pay off your multiple debts. You will have to follow the advice of your payday consolidation program company. It is not something you have to worry about  because they are professionals and have developed these programs to help you.

The third option for you is payday loan consolidation debt settlement. It is in fact like other debt settlement. All that is required of you is to find a decent payday loan consolidation company and try to stay away from scam schemes. Payday consolidation loan debt settlement companies offer a legitimate service. First, they will discuss your financial troubles with you. Then they will create a personalized plan for you. It will include the fee, amount they think you can afford to pay for your debt.

That amount must be equal to what they think they can negotiate with your creditors. That is because they need to convince them to settle your debt for less than the original amount. On the other hand, you have to do is almost close to nothing and you get a lot in return. The bad thing, however, is that you really need to listen what your payday consolidation loan debt settlement company advise you to do. Otherwise, you might compromise the process because your actions may affect future negotiations with your creditors.

They will advise you to stop all payments to your creditors which might temporary damage your credit report. Therefore, it may be tempting for you not to listen to them. However, you should bear in mind that you have chosen professional assistance that has proven efficient  for many other people and there is a reason for their advice.

3. The procedure might be lengthy   

Efficient financial solutions require patience. Payday loans normally provide a quick relief for when the deadlines are approaching and you don’t have enough money to pay your bills. However, faster the solution, the less its effect last. The length of the procedure will depend on which of the three options you will choose. In the best case scenario, it is no less than six months or a year.

A payday consolidation program and payday consolidation loan debt settlement normally take between 18 months and five years depending on various factors such as how many creditors you have and how willing are they to participate in the process and how much you can afford to pay monthly. With payday consolidation loan, you are looking at one to 20 years. The good thing though is that you will have a lower interest rate and a monthly payment specially chosen to match your personal budget.

4. You may not be able to stay on top of your payday loan consolidation monthly payments
multiple payday loans

multiple payday loans

Unfortunately, that is an unavoidable danger. If you have multiple payday loans, you have to make multiple monthly payments. If you go for a payday consolidation loan, you only have to make a single monthly payment. If you chose payday consolidation program, you still get to make a monthly payment. With payday consolidation loan debt settlement in order for you to collect the money to make the single repayment, you have to make monthly payments for a certain amount of time. You can see the trouble here – in all those cases, there is a chance for you to fall behind on those payments. You just have a choice between the bigger and the smaller evil.

You have to evaluate which is a better option for you personally. The benefit of payday consolidation program is that the payment is just one as opposed to multiple repayments. That means one creditor, one relatively lower interest rate, one payment. The same goes for payday consolidation loan. A payday consolidation loan debt settlement offers one additional benefit – it makes all or most of your debt to go away forever for less than its original cost.

5. In secured loans, you risk losing your collateral

A collateral is an asset that you offer to the lender to secure the loan. That means that if you stop making your repayments, the creditor can seize your asset to cover his losses. That only applies to payday consolidation loan where a collateral is required. Because of the collateral, your debt offers less risk for the creditor and that allows him to give you the desired lower interest rate.

Conclusion  

Payday loan consolidation is a rather safe mechanism that can help you a lot. Although it comes with few pitfalls, they are not very dangerous or damaging to your budget and credit score. In fact, most of the risks are manageable. There is help out there which you can seek out. So stay informed, be prepared and shape up your financial situation.

10 myths about selling credit card debt

You are very much in debt and you want to get out of it? You are not the only one. In fact, credit card debt settlement is so popular that you can hear about it anywhere – on TV, radio and there are tons of articles about it on the Internet as well. With all that fuss, it is only normal that a lot of myths have been created around the topic of credit card debt settlement support. However, you want to stay on the safe side. Do not get tricked. We are here to inform you what you can trust about selling credit card debt and what not. In this article, you will find out the 10 most popular myths about selling credit card debt.

First, you need to understand what is credit card debt settlement and how it works. With so much information out there, it is easy to get confused. In fact, credit card debt settlement is not so complicated as it may sound at first.
There are also some terms which you need to understand. Here are some of them:

credit card debt settlement

credit card debt settlement

Credit card debt settlement  

it is the settlement arranged by your credit card debt settlement company with your creditors. Through that settlement, you get a reduction of your debt.

Unsecured debt 

it is a loan that is not linked to any underlying assets of yours. Credit card debt is an unsecured debt.

Secured debt 

it is the kind of debt  related to an asset you have. In most cases, it’s your car or your house. The way it works is that if you are very late with your payments or have stopped paying them altogether and have not contacted your creditors, you can lose your property. That is because your property serves as a guarantee for your debt and when you do not take care of your debt, your creditor can sell your asset (that is collateral for the debt) to get his money back.

It is called “secured” because there is a higher chance for the borrower to be able to collect his money and therefore the loan has a lower risk. The most popular one is mortgage which a type of secured debt related to your home. In some cases, you can even take out a second or third mortgage. However, in those cases, it will be for a smaller amount of money than the first mortgage.

Debt collector 

Debt collector

Debt collector

That is a figure that does not always appear when you have debt. When you have not paid what you owe for 180 days after it was originally due, your creditors pretty much give up on you. That is when they send your case to a debt collector.

Debt settlement companies 

Debt settlement companies are companies that fix your financial situation. For a certain fee, they negotiate with your creditors and help you collect enough money to repay your debt. They are your perfect partner for becoming debt-free.

Debt settlement attorney

Debt settlement attorney or debt settlement lawyer is a legal professional whom you can hire to provide the same service as a credit card debt settlement company.

Debt settlement letter

This is a general term for all kinds of letters sent and received by both your credit card debt settlement company and your creditor during the process of negotiation. You can find some sample letters on the Internet. Those include but are not limited to an offer letter, a counter offer letter, letter of acceptance of a verbal offer and others.

Lump-sum settlement 

Lump-sum settlement

Lump-sum settlement

This is the settlement you reach with your credit card debt settlement company. That amount is the amount you have agreed to put in your special saving account after several months. Only after you have this lump sum from the settlement, the negotiations with your creditors will start.

Debt relief service 

This is a general term that includes both debt settlement and debt consolidation (there is a slight difference between the two terms, mainly in who offers the service and how much it costs)

Credit repair

Most simply put it is a scam. Certain companies claim they can clear your bad credit report history for you. No one can do that unfortunately. The only thing you can do is go out of debt in the first place and try to maintain a better credit card record in the future.

10 myths about selling credit card debt

credit card debt settlement myths

credit card debt settlement myths

Now that you have an understanding of the basics terms, it is time to learn the truth about  debt relief service. Not everything you can read online is correct and correspond to the reality of things.

  1. Everybody can pay less for their debt for almost any reason or even without one

That unfortunately is not true. There is an underlying criteria that both creditors and legitimate credit card debt settlement companies should screen their clients. They should make sure that you meet the criteria before they do business with you.
People who are considered eligible are normally those who need credit card debt settlement due to temporary reasons. They have reached the point of being too much in debt. However, in some cases, people who just overspent may classify.

To sum up, although there is certain criteria there is still a high chance you might classify. It depends on many factors and it is an individual thing but you have to try. Our advice is to do a little research and try to find a credit card debt settlement company. See what they tell you and go from there.

  1. I can settle my credit card debt on my own

do not try to negotiate on your own

do not try to negotiate on your own

Many people are convinced that “it is not that hard and I can just negotiate for myself”. No matter what brought you to that thought – from I have always been good at negotiating to I do not have enough money to pay a credit card debt settlement company, you need to stop and think it over. Although hiring a credit card debt settlement requires you to pay for their services, you are getting a lot out of this deal.

First of all, these companies provide professional services. They have been doing this much longer and more successfully than you. The thing is – you do need outside help. Secondly, your creditors are more likely to speak to a debt settlement company than with you.

In many cases, credit card debt settlement companies have established relations with the creditors whom they have worked with in the past. It makes the whole process easier and faster. Make the smart choice and do not try to negotiate on your own. It will probably not work out the way you want.

  1. The only options I have are credit card debt settlement and bankruptcy

There are several options

There are several options

That is not exactly true. There are several options out there and you can find a complete list of them on our web page. They include self-help, debt consolidation, credit card debt counseling service, bankruptcy either under Chapter 7 or Chapter 11 of the Bankruptcy code. Many Americans think that filing for bankruptcy is not a big deal. In fact, it is an extreme measure and it should be taken with caution only when there is a real need. That is for example the case when you have tens of thousands of dollars of debt.

Not only is bankruptcy a really extreme thing to do, it is expensive as well. You have to pay stay fees and court fees and attorney fees. Bankruptcy is rarely the solution for your problems. The reason why this myth persisted is because bankruptcy is so popular in common language and movies. Debt settlement is by far the best option out there. It is the established way to fix your financial situation and it works. Although you know there are other options, you should also remember credit card debt settlement is probably the best one. It gives you a wanted result you cannot achieve otherwise.

  1. I have many other options better than credit card debt settlement

You do have other options but the thing is, they may not be better than credit card debt settlement. Once you compare the pros and cons of debt settlement with all the disadvantages the other options, it will become clear to you. Credit card debt settlement is probably the easiest, fastest and cheapest way to get out of debt. It is the reason why debt settlement is the established practice in the area.

  1. I have to pay in advance to the debt settlement company and they control my money

credit card debt settlement company does not control your money

credit card debt settlement company does not control your money

You should know that this is not always the case. Although previously credit card debt settlement companies were able to request for  advance payment, that is not the case anymore. Due to some changes in litigation, debt companies that use telemarketing (saying that they offer their services over the phone) are banned from collecting their fees in advance (meaning before they have performed any actual service for you). This rule is by the Federal Trade Commission and is in effect since October 2010. In all honesty, this is more one of the most common scams out there.

Moreover, the credit card debt settlement company does not control your money. You will be required to have a separate bank account to save the needed amount of money but that does not mean that the credit card debt settlement company controls your money. This approach has been chosen because it is the only way in which you can separate the money you need for paying your debts from the amount you use for your daily needs and other expenses. It is actually making it easier for you to reach your goal.

You should be aware that this account is actually supposed to be controlled by a third independent party (which all, by the way, is no supposed to receive a referral fee- that is another popular scam- more on what to be careful with while part of a credit card debt settlement procedure you can find on our web page). There is an important difference between myths and scams.

  1. Credit card debt settlement will hurt my credit card report

That is another myth. As every other financial operation credit card debt settlement will reflect on your credit report but it is a procedure designed to make you debt-free. Not owing money is actually good for your credit report. Thought the process you may have to stop making payments to some of your creditor temporarily and that might have some reflection on your credit report as well. However, this effect will be temporal and the end result will be that you are free of debt and have a good credit card report.

  1. If I do not reach a debt settlement, my debt will chase me forever

That is fortunately not true. There is actually a certain number of years after which your creditors cannot enforce your debt legally in court. That is regulated by the statute of limitations. You should have in mind that the number of years vary from state to state. However, if you have not paid for a certain amount of years, you actually do not have to anymore. After the limitation period has expired, you are under no obligation to pay to the creditor and he has no legal way to force you to. Any payment you make after that period means two things.

Firstly, it is completely voluntarily and secondly, it is not in your interest since it probably negates the limitation argument. The thing is that in order to use that option, you need to use the limitation argument on time (at any point after the period has expired). If you have paid voluntarily after that period, you cannot ask for your money back using the limitation argument. The thing is, you have not paid without a reason – your debt does not really cease to exist. It is just not enforceable in court anymore and therefore, you can skip paying it.
When the legal obligation goes away, so will the credit damage. Of course, that will only happen after seven years that is when the fact you have not paid will no longer occur on your credit report.

  1. When I am done with debt settlement, I will be completely free

some debts simply do not qualify for debt settlement

some debts simply do not qualify for debt settlement

Unfortunately, that is not absolutely true. The problem is not that credit card debt settlement companies make promises they cannot keep . The thing is, there are some kinds of debt that simply do not qualify for debt settlement. Those include but are not limited to student loans, alimony and child support or taxes. Even you file for bankruptcy, you will still have to pay them.

They chase you forever, especially taxes. You should bear in mind that even if you reach a really good debt settlement, your creditors will report it to the IRS which might consider the money you have saved from paying less as an income and therefore taxable. Do not worry too much as that is not always the case and there are a few exceptions.

  1. Using a credit card debt settlement company is very expensive 

Not to say it comes without a price, but you do not really have other ways to get out of debt for free. To start with, all the related services out there are paid. Hiring a credit card debt settlement company is probably among the cheapest compared to bankruptcy. With bankruptcy, you have to pay for filing the document, court fees and those are up to several thousand dollars. In addition, you will need to hire a lawyer to represent you in court and their fees vary. So with credit card debt settlement, you can at least make  your money worth.

  1. Debt settlement is a bad idea

In fact, credit card debt settlement is a well established practice. It is easy, quick and cheap. Although it has some pitfalls, it is probably one of the best ways to deal with your debts. The myth that debt settlement is a bad idea may have stemmed from the fact there are certain possible scams schemes out there. However, you can stay clear of those scams by simply being careful.  

Those are the 10 most popular myths about credit card debt settlement. You need to be critical of what you have read online. Credit card debt is hard to deal with but it can be settled and you can be debt-free.

Getting out of debt: pros and cons of debt settlement

If your debt has started to get overwhelming, you are bound to start looking for a way out. In fact, you have several options, from self-help to filing for bankruptcy. It depends on your personal financial situation as to which option suits you better. However, many people opt for  debt settlement.

Debt settlement is an option that helps you settle your debt for a lot less that what you actually owe. It may sound good but you should be aware of its pitfalls. In this article, you can find out the advantages and disadvantages of debt settlement to help you make an informed financial choice.

What is debt settlement?

What is debt settlement?

What is debt settlement?

Debt settlement is performed by a debt settlement company of your choice. Their main objective is to negotiate on your behalf with your creditors. A debt settlement company could manage to settle your debt for less than what you actually owe. You will literally be paying pennies on the dollar. It is no wonder why so many people go for debt settlement as that is perceived to be an established way to deal with debts.

What is a debt settlement attorney?

A debt settlement attorney basically does the same thing as a debt settlement company. The only difference is that he is a legal professional. For a debt settlement attorney, settling your debts is not his main work for him him unlike debt settlement companies whose main business is helping their clients settle debts. Another difference is  the fees. With debt settlement lawyers, you will probably be getting a contingency deal. That means that he will get paid depending on how much he saves for you. However, some attorneys may be specialized in bankruptcy and advice you to take that option. The choice is completely yours. You need to make sure you compare other options you are presented with. If you have your mind set on debt settlement, do not let yourself be bullied or persuaded into changing your opinion. It is important to know what is the best for yourself.

How do debt settlement companies work?

How do debt settlement companies work?

How do debt settlement companies work?

First, debt settlement companies will discuss with you what kind of debt settlement program you can take up. After that, the company and you will have to reach an agreement on how much you will pay them for their service. You will also have to agree on how much you will be paying for your debts and you will have to prepare that amount in the following months. For this purpose, the debt settlement company will require you to open a separate bank account operated by a third independent party and make a monthly deposit into it until you reach the agreed amount.

Once that is done, the debt settlement company will start contacting and negotiating with your creditors. They will reach a debt settlement agreement between themselves. That agreement states how much you will have to actually pay for what you owe. When your debt has been settled with a certain creditor, you do not owe them money anymore. You have to pay the debt settlement company for their services after they’ve helped you settle your debt.

What are the advantages of debt settlement?

Your debts get settled fast

Your debts get settled fast

There are many benefits of debt settlement. That is why many people decide to go with this option to help themselves get out of debt.

1.  You do not have to deal with everything on your own – In fact, very little is required of you. All you need to do is make your monthly payments. Compared to self-help, you have to organize everything on your own – from your budgeting, negotiations with your creditors or debt collectors. It might get really hard and overwhelming and there is no saying how self-help in negotiating with your creditors may end. The good thing about debt settlement is you can just relax and let debt settlement professionals do all the hard work for you.

2. You have a trustworthy partner on your side – Whenever you are confused about the debt settlement process or have questions on how to improve your financial situation, you have your debt settlement company to help you.

3. Your debts get settled fast – Although it is not a magic tool that will make all your debts disappear overnight, debt settlement is relatively fast. It only takes up to several months. Debt settlement is fast compared to other options which may take two or up to seven years. During your debt settlement period,all you need to do is make monthly payments.

4. Your debts are getting settled for less than what you actually owe – Many times, your debt will get settled for less than 50% of the original debt. That is a really great deal and will save you a lot of money, time.

5.  It is simple  – Debt settlement is simple to understand and in its proceeding. It is only three steps – find a debt settlement company, deposit the agreement amount of money in your special bank account, sit back and wait for the debt settlement company negotiate your debt with your creditors.

6. It is easy – You don’t really have to do much except deposit the agreed amount of money in the special account.

7.  It gets you great savings – your debt could get settled for less than 50% of the original amount

What are the disadvantages of debt settlement?

disadvantages

disadvantages

Debt settlement has few downfalls too.

1. You need to do careful research on your debt settlement company

Debt settlement might be your best option but there could be people out there who try to take advantage of your situation. There are scams and scam companies. Don’t trust the first debt settlement company that you see Unfortunately, there is not dependable listing of debt settlement companies which could make it difficult when choosing the company you want to work with.

However, there are a couple of steps you can take in order not to be deceived. First, enter the name of a company you think is good into a search engine and see what people say about it online. Second, check the company with your state Attorney General. Third, check the company status at the local consumer protection agency. They will let you know if there are complaints against that company. After these three simple steps, you are about done with your debt settlement company research. All it is left for you to do is contact them and see how they conduct themselves professionally.

2. You should be careful about the scam schemes out there

You can find a lot of information warning you about scam schemes. The most popular scam is related to the fees. Some companies would require their clients to pay them in advance. Under federal law, they are not allowed to ask for this. Company may only request for their fee after they have finished some kind of service for you or when they have settled some of your debts. Even then, they can only ask for the payment for the debt they have already dealt with. For example, if you have 5 creditors and they have negotiated a successful deal with two of them, they can only receive two-fifths of their fee or 40% of their fees.

3. Debt settlement might temporarily damage your credit report

Debt settlement might damage your credit report

Debt settlement might damage your credit report

In some cases, you might be required to stop all payments to all your creditors. That will lead to negative effects on your credit report but those are only temporary. The important thing is that at the end of debt settlement, you will be debt- free and there is nothing better for your credit report than that.

4. You may continue to get calls from your creditors

Even after your debt has been settled, some creditors may keep trying to contact you and ask for repayments. Although that might seem worrying or annoying, you can deal with it. The best thing to do is consult your lawyer to advise you on how to get rid of your creditors because in some cases, those creditors may even try to sue you. However, when your debt has been settled, they have no basis to ask you for more money. Do not let yourself be bullied or harassed.

5.  Some creditors may be unwilling to negotiate

Nevertheless, that is your debt settlement company problem. If they are not able to convince your creditor to settle or negotiate with them, they will not get their fee. So the debt settlement professionals are actually highly motivated to achieve the agreed goal. The problem is that creditors are under no obligation to enter any kind of negotiations. However, for many of them, it is the reasonable thing to do to get whatever money they can have than to chase after you forever. When you are too much into debt, they may be willing to settle for less.

6. You may have to pay some bank fees   

You reach an agreement with your debt settlement company and you have to open a special bank account and make a monthly deposit into it. They will be used for the repayment of your debts. The account should be operated by a third independent party and you will have to make some payment to maintain. In reality, the money you pay to maintain that special account is just a drop in the ocean compared to how much money you are saving through the debt settlement.

It is obvious that with debt settlement, you have almost nothing to lose and a lot to win. It is the best choice you can make to be debt-free and improve your financial situation. That will not only benefit you but your family as well. Struggling with an impossible amount of debt is of no good for anybody, not even for your creditors. They want to see your debts settled too and that is why they agree to let you pay less than what you actually owe.