Locating Ideal Debt Settlement Services in Florence, Alabama
Finding yourself unable to make payments on time? Are creditors starting to get aggressive in their attempts to receive payment? Are you stressing over what to do next? If you have looked into alternative methods of debt relief, but the only option that seems available is bankruptcy, it is recommended to contact a debt settlement company in Florence, Alabama, first. Bankruptcy seriously damages your credit and stays on your report forever, which is why so many are choosing debt settlement.
Are Debt Settlement Companies Legitament?
Yes, debt settlement companies are a legit business model. However, there are people out there that take advantage of people in debt and use debt settlement as a cover to pull off scams. There are some things you can do to avoid getting caught up in one of these types of scams.
If you are contacted by someone over the phone claiming to be with a debt settlement company, but you did contact them first, be cautious. Get their information, where they are calling from, and do your research before providing personal information. You never know who is calling you!
If you are the one calling the debt settlement company, be sure to ask questions and watch for signs. The first sign is often a large application fee or requesting to cover their services upfront. The company may be legit and operating within the law, but companies that require large upfront fees often do very little to help get the lowest settlement possible.
While not exactly a scam, these types of companies will often claim to have done their best to get the lowest settlement for you. In reality, they do not try very hard, if at all, to negotiate with creditors so they can get you on a repayment plan and move on to the next consumer. In addition, you may end up learning they did not settle all your debts if a creditor opens a lawsuit against you.
Regardless of which debt settlement company you choose to go with, it is always best practice to contact the creditors you owe after entering a successful debt settlement plan. Although creditors can no longer contact you about debts, you should confirm with each one that the debt was, in fact, settled. This eliminates the chance of surprises later.
How Do Debt Settlement Agencies Work?
In recent years with the economy bouncing around, it is a thriving industry that is helping millions of people get out of debt. The idea behind settlement is not only to get the consumer out of debt but ensure the creditors receive something on balance owed. In return, debt settlement companies charge a fee for these services.
Can It Really Help Me Lower Debt?
Getting out of debt is hard enough without worrying about whether or not your creditor is going to take your possessions and kick you out of your home in order to settle your debts. Debt settlement services allow you to keep everything you own while paying off some or all of your debts over a period of time. A lot of people don’t think that debt settlement can save them any money, but actually, with these companies, they can get a reduction on their credit card bills between 10% and 30%.
Advantages Of Successful Debt Settlement
There are several advantages of choosing debt settlement services over bankruptcy. One of the advantages is that if you apply for bankruptcy and you’re denied because you don’t meet the requirements, you will not be able to receive assistance from a debt relief company either. On the other hand, debt settlement companies offer assistance to those who have filed for bankruptcy.
Another advantage is that with debt settlement, the consumer can expect to have their unsecured debts reduced by around thirty percent of their total balance, whereas this does not occur with a consumer’s unsecured debts in bankruptcy.
Disadvantages of Debt Settlement Services
Every debt settlement company has its own distinct disadvantages. These are outlined below to make your decision as easy as possible:
Delays – Firms that require you to postpone repayment on certain bills while you work with them in an attempt to get a lower monthly payment. This can lead to your balances increasing and may be more costly in the end.
Free estimates – Providing a quote without talking about the conditions of their services could lead to unexpected fees and conditions after signing the agreement. Being fully informed beforehand will allow you to choose the right debt relief plan for you.
High fees – Debt settlement is not a process that should cost you thousands of dollars. It should be relatively inexpensive so you can end your debt faster. A high fee could be a sign of hidden costs or hidden charges after signing their agreement.
No bankruptcy protection – If your situation is dire, you may want to consider filing for bankruptcy protection. Debt settlement companies will not allow you to do so as it can result in their own fees and charges going up, which means less debt relief for you.
Damages credit – Debt settlement plans will lower your credit score, but the overall damage is less than bankruptcy would cause. Your on-time payments can also help rebuild your credit over time, and after 7 years, it no longer shows the settlement on credit report checks. That is a major bonus over Chapter 7 or 13.
Taxed as income – If the debt you owe is on the lower end of things, this may not be a major concern. However, if you owe a massive amount, you may want to speak with a financial advisor or tax professional first. Sadly, once creditors report an amount of debt as “settled,” the IRS will consider it as taxable income.
For example, if you owed $100,000 in debt and settled 60%, the IRS would consider that $60,000 in taxable income. The amount owed would be based on your current tax bracket but could be a nifty sum. Owning creditors a large sum is bad, but owing the IRS could be a nightmare. A tax professional can advise the best way to approach a large amount of debt based on your situation.
Know How To Spot Debt Settlement Scams
Unfortunately, there are some people and even business models out there that try to take advantage of another person’s rough patch. This could come in the form of full-on scam callers or simply deceptive practices by otherwise legal businesses.
The best way to avoid getting scammed or deceived by debt settlement services is to know what you’re looking for. Below are several red flags to be aware of:
Robocalls – If you’re contacted by a debt settlement robocall, not only is this a big red flag that someone is trying to get your personal information, but it is also an illegal practice.
Guarantees – Is a debt settlement company trying to persuade you into using their services by guaranteeing a certain outcome or making promises they can “cut your debt in half”? No matter how long a company has been in business, it cannot know the outcome for certain. Creditors are not legally bound to accept less than what you owe. Yes, in most cases, they do accept a lower amount, but they don’t have to.
Upfront Costs – It is normal to have a small application fee upfront, but excessive upfront fees are not. If they are requesting a lump sum upfront for services they have yet to provide, keep searching.
Questionable Contacts – In addition to a website, does the business list a phone number to speak with someone? If not, keep looking because a website alone does not ensure they are a legit business.
Get It In Writing – If a debt settlement company only wants to provide verbal confirmation of services provided or the settlement amount, this could be a concern. Always get the terms in writing, or… you got it. Keep looking.
The best way to avoid scams is simply to be aware. Always ask questions, and take notice of how transparent they are. Do they willingly provide information, or do you have to ask the right question to get an answer? When they answer, do they hesitate like they are trying to avoid answering directly? Remember, if it sounds too good to be true, it probably is. This saying originated for a reason!
Is Debt Settlement The Only Option For You?
There are various debt relief options out there, but the one that is right for you depends on your situation. Debt settlement is only recommended if you have no other option besides bankruptcy. Below are some of the debt relief options to consider:
- Debt management
- Debt consolidation
- Debt settlement
- Bankruptcy
Find Debt Settlement Opportunities In Florence, Alabama
When you are searching for debt settlement services in Florence, Alabama, contact the Attorney general’s office first. They will be able to tell you any complaints filed against the companies you’re looking into.
Remember that non-profit is not always there to help the consumer, so don’t expect services to be cheaper or free. Many businesses use this label simply for the business benefits it provides and pads the monthly payment to benefit their earnings.
Always do your research, look into online reviews and testimonials, and ask around friends or family that have used similar services. This will help you avoid being overcharged on services in the long run.
The bottom line:
If you are so far behind that you cannot make your payments anymore, then debt settlement in Florence, Alabama, maybe your best bet. If you are able to make your payments, other options, such as debt consolidation, could work. Consider your situation and that settlement services will damage your credit in the near future.
