How To Get Debt Settlement in Caldwell, Kansas
You don’t have to file for bankruptcy in order to get out of debt. The more traditional option, debt settlement, can be risky and difficult if you don’t know what you’re doing. Thankfully, there are some debt settlement companies that have the experience and resources to help you settle your debts quickly, with only a small amount of your assets lost to the bank. But how do you know which company is right for you? Read this guide to find out how to get out of debt without bankruptcy in Caldwell, Kansas, so that you can start living free of your financial burdens once and for all!
Can Debt Settlement Save Me Money?
Are you wondering why millions of people have chosen to go with debt settlement programs? It is among the best options for many to avoid bankruptcy. Consumers tend to spend too much, getting to a point where they can no longer maintain their payments or simply have too many to keep up with and fall behind. Regardless of the reason behind falling off track, there are multiple methods of debt relief to choose from.
If other approaches, such as a debt consolidation loan or debt management, are no longer an option, debt settlement is worth checking out. It is not the best option as a first choice, as there are consequences to settling debt. But, they are not nearly as bad or long-lasting as the consequences of entering bankruptcy. Bankruptcy will last much longer than 10 years than its active on your credit report. It will appear forever, and you will always have to explain what happened for loan requests, job applications, or other creditors.
If your lie and say that you have never filed for bankruptcy when you have, you can also be convicted of fraud! That means fines to pay and potential prison time. If you lied on a job application, you’d lose the job too. However, you do not have to worry about that stuff with debt settlement as it’s not considered as bad. It may not prevent you from getting a job, and you may even be able to get loans and credit card approval much quicker than if you filed for bankruptcy.
Credit scores are not impacted as much by settling, and it only shows on your reports for 7 years instead of 10. Once the period is over, it is removed from your report, and “settled” is no longer visible. It will be like it never happened, so no stressing over creditors, banks, employers, or anyone needing to pull a credit report being biased off the first impression of you.
Debt settlement is not cheating the credit card companies or banks either. The programs are designed for those with no other way to pay the full amount of their debts. It is a last resort effort to help all parties involved benefit from the assistance. Between interest and services fees to creditors, it is possible that you have actually repaid the amount originally owed anyway, if not more.
Debt collectors know they are more likely to get more from agreeing to settle than gambling and waiting for consumers to go through bankruptcy court. They may never get paid if they do that, so most credit card companies are willing to work with debt settlement agencies.
What Are The Advantages of Debt Settlement?
There are some clear advantages to using debt settlement besides avoiding bankruptcy. For example, you can save money on monthly payments, get lower interest, and consolidate payments into one more manageable installment.
Debt Settlement Can Shorten Repayment Periods
By going the settlement route, you can get debts paid off in just a few years, often within 2 or 3 years instead of up to 5 years with other types of debt relief. Many reports being debt free in less than 12 months by accepting a bit larger monthly payment and shorter repayment periods. This is much quicker than if you were to pay debts off at the current minimum rates, especially on larger amounts.
Bankruptcy will completely ruin your credit and reputation, while settlement programs are there to help protect you from that happening where possible. Bankruptcy is a public record, while settlement is not, meaning it is harder for people to find out, and they have to pull your credit report to do so. With bankruptcy, they simply have to run a quick background check for a few dollars.
Open Credit Cards May Be Allowed
If you have open credit card balances, then you may be allowed to continue having them open after the settlement is successful. This will prevent utilization from increasing with a reduced credit balance. There are some circumstances where the debt settlement company requires they be closed. Unless the terms you agree to specifically state that you will have to close and stop using the cards, you can leave them open. You may even be allowed to use them if needed, but it is not recommended to do so.
Simplify The Debt Management Process
If you’re settling a number of creditors, you will enjoy the benefit of a single payment each month. This keeps you from forgetting what bill is due at different parts of the month.
Save On Interest Rates
Monthly installments are often much lower after settlement because of the lower interest rates attached to them. Every factor that helps lower your overall debt and monthly installment is putting more money in your pocket each month for self-care or adding to a nest egg.
Drawbacks of Debt Settlement in Caldwell, Kansas
Naturally, every good thing in life has a downside, and debt settlement is no different. It is, after all, why it should never be the first choice to get out of debt if you can find less aggressive debt relief options. You don’t want to ruin a good credit score if you don’t have to. The downsides mentioned below are some things to keep an eye out for.
Some Debt Settlement Companies Include Hidden Fees
If you’re not doing your research, you may find out that your monthly payment could have been even less with a settlement that does not add several “extra” fees. Some of these are in the form of higher interest or service charges, others add monthly maintenance fees, or you could see a charge for “setup cost.”
This is one of the areas you should always ask about in your initial meeting. How much do they charge, what services are included, and what repayment periods will be offered? If they only provide long periods (2 – 4 years), keep looking because they make more money on longer periods. Even if you can’t afford to accept a shorter 1 or 2-year term, you want to find a transparent business that is going to offer it to you.
The IRS Considers Settlements as Taxable Income
The IRS could find your settled or canceled debts to be taxable. Based on your situation, you may need to pay in on this amount which can be sizable if you settled a large debt. If you owe a massive amount of debt, it is advised to speak with a professional prior to accepting a debt settlement, so you are not surprised. If there is anything worse than not being able to pay creditors, it is not being able to pay the IRS!
What’s Settling Debt Going To Cost?
There is usually a small charge for the application, and the service charge is included in the monthly installments. This averages 10% to 20% of the total debt at the time of applying, with a 6-month to the 2-year repayment period. Therefore, a consumer that has $10,000 in debt could only be charged $1,000. If they can settle your debts for half what you had, you’re still saving thousands of dollars.
The Process of Debt Settlement
When connecting with the debt settlement company you choose, they will begin contacting your creditors to work out a deal for lower payoffs. Most creditors are willing to consent with lower amounts, even up to half of what is owed. On average, the final results are often between 40% to 60% less than you originally owed.
Creditors and collection agencies understand without consenting to a deal, they are likely to receive nothing, so they are prepared to agree to a reasonable negotiation process. For consumers trying debt settlement, creditors know bankruptcy is a realistic future where they may not get anything. Many are going through hardships that prevent them from being able to make payments on time or even pay their bills at all.
If you are down to just having two options available – bankruptcy or debt settlement – choosing to settle is the more efficient and smart choice. Although there is no guarantee that it will be successful, if it doesn’t work out, you can still attempt bankruptcy. However, if you fail with bankruptcy first, you cannot try to settle.
Each debt settlement company in Caldwell, Kansas, will vary in its standards, status, and price ranges. Locate a service that offers high ratings in all three areas.
The Largest Reason People Choose to Settle
While settling debt is going to hurt your credit, it does not ruin it. The impact can begin to reverse itself with on-time payments in under a year, and you could be debt free and have a good credit score again within a couple years on average.
Putting a nest egg together can take time, so some people put their property up as collateral to speed the process. With bankruptcy, you likely have no choice but to sell your property. With the settlement, you would only lose it if you can’t repay.
Many debt settlement companies will keep in touch to ensure you are still on track. Instead of dealing with the debt alone, they are there to help keep you on track.
Locating Debt Settlement In Caldwell, Kansas
Never choose a business to work with before you research them. To do this, contact your Attorney General and ask about any complaints against the company.
Being well informed is the best way to avoid getting ripped off by a debt settlement company. Avoid deceptive tactics by asking if they offer multiple repayment terms, how many methods of contact are available, and what they charge for. If they request a large payment upfront, do not sign anything.
Find a business that will offer to meet you in person. This is an ideal way to meet the people who are going to be helping get you out of debt and charge you for doing so. Many places will provide in-person, telephone, and online contact methods, and you should find one that has all three.
Non-profit organizations are not always honest about their services. Never assume that it will be discounted or free because the sad reality is they often charge much more than normal. They can also sneak in other fees that you may not know about too. Not to say they are all using deceptive business tactics, but many do.
Any time you are looking into something that has a major impact on your life, always go over reviews and testimonials carefully.
