First of all, what is debt settlement? It is the process of eliminating all your outstanding credit card debt for less than you originally owed to creditors. Most reputable companies out there can reduce your unsecured debts by 50% or more. The main goal of this how to on debt settlement is help you get your finances back on track and to avoid the dreaded bankruptcy.
What's the process? First, you usually have to fill out a form to make sure you qualify for the program. If you have more than $10K in unsecured debt and more than 3 forms of this debt, chances are you qualify. Once you meet the requirements, the company will add up all your monthly credit card payments and give you different options. For example, if you pay $800 on all your cards, you can expect to pay $200 to $400 a month depending on how long you take to pay off the debts. If you pick a plan for 4 years, you will make payments each month that go into an escrow account. As your money accrues in that account, it will be used to pay off each card one by one. By the end of the 4 years you will be debt free! Imagine if you just keep paying those minimum payments each month, you'll never pay those cards off!
Does debt settlement affect my credit score? Yes, it will. Do you have perfect credit right now? Probably not! Debt settlement will hurt your credit score, but it is nowhere near the severity of having a BK on your credit report. Those take YEARS to get off! Chances are, if you need help and have maxed out your cards or even missed a couple payments - your credit has already been adversly affected from being in this situation. Debt settlement will allow you to pay off your debts completely in a few years and then you can focus on rebuilding your credit score and getting your life back on track!
Do I get charged an arm and a leg for this? Not unless you are 1 million in debt! Most companies charge a percentage of the total amount of your debt. They take the fees out of your monthly payments. So, for example, if you have $1050 a month in mimimum payments and you decide to pay those cards off in 4 years at $275 a month - that's it. You just pay the $275 a month for 4 years and you are debt free. The fees come out of the $275, so it's way less than you'd pay your creditors each month with the fees included. Remember, the more you pay each month, the faster you can get out of debt. Just pick a plan you can afford with your budget and stick with it. With any plan, you are going to INCREASE your cash flow each month and be able to get back on track.
So, if you have $10,000 in unsecured debt or more, you now have the facts. You can either pay your payments down yourself with high interest rates over many years (sometimes 30 years, do the math), you can file BK and ruin your credit completely for many years and still have to pay those debt back in most cases or you can choose debt settlement. Hurt your credit a little bit, but pay lower payments each month, increase your cash flow and be debt free in 1 to 4 years. The choice is yours! That's it for the how to debt settlement.
![[Valid RSS feed]](http://www.freebie-articles.com/images/rss.gif "XML Feed For RSS")
Category Rss Feed
Print This Article
Add To Favorites