Debt Settlement In Hesston, Kansas May Be The Answer
When it comes to getting out of debt, some people think the only way to do so is through filing bankruptcy and completely wiping the slate clean. If you’re looking for a faster, cheaper, and safer way to get out of debt, plenty of other options are available; you just have to know where to look! For example, if you’re in Hesston, Kansas, and want to learn how to get out of debt without bankruptcy, contact a local debt settlement agency that can start working on your case immediately!
Can I Save Money By Settling My Debts?
If you are in a situation where you need to know more about debt settlement versus debt relief, then keep reading for some facts and figures. Filing for bankruptcy will cost most people more money in attorney’s fees than they will save with debt relief. So not only can you get out of debt faster with debt relief, but it can also save you money when all is said and done.
Debt Settlement: Is It a Good Idea?
Are you wondering if debt settlement is a good idea or not? The first thing you need to do is consider your situation. If you can afford to pay your minimum payments, it may be a good idea to consider a debt settlement, especially if you have fallen behind and missed multiple payments. However, if you can afford to make your payments or just need a little help, a debt consolidation loan may be a better option.
Debt settlement will damage your credit score, so keep that in mind when considering looking into one. The purpose of settling debt is to avoid bankruptcy, and that is the only reason it should be used. If that sounds like your situation, then it can be worth getting debts settled. You will have a lower payment, shorter repayment period, and lower interest rates, and it won’t harm your credit nearly as long as a bankruptcy would.
Debt settlement programs will appear on your credit report for 7 years and are not public record. This is 3 years less than bankruptcy, which is a public record, and anyone can easily find out you’ve filed for bankruptcy. Debt settlement is fully removed after this period, where bankruptcy will be visible to you for the rest of your life.
Debt settlement can help you avoid issues with getting approved for a loan, credit card, or even job offer. If an application asks if you have ever filed for bankruptcy, you are legally obligated to be truthful. If you lie and say you didn’t, you could face fraud charges, lose your job if lying to an employee, etc.
Is Settlement Ripping Off Creditors?
Some people think that settling debts is a way to cheat creditors from receiving payment for what’s owed to them. Although, the truth of the matter is it may be the only way they can be sure to receive a payment. The strategy is to let people get out of debt easier by reducing the amount owed. The creditors are getting some type of payment, in addition to the interest already paid above the principle. The interest paid in could very well be more than you’ve owed anyway, especially if you have been paying creditors back for years.
If you were to file for bankruptcy, you are going to be forced to liquidate most of your personal assets, including any family heirlooms, vehicles, and even your home. The proceeds from these sales will be divided among your creditors. If you have no assets, they likely won’t receive a dime and have to write off a complete loss for the remaining debt. Thus, one could say bankruptcy is cheating creditors more than settlement.
Shorter Repayment Periods Are Possible With Debt Settlement
If your situation allows, you may be debt free in less than a year. In most cases, a good debt settlement plan will provide the ability to reach financial freedom in 2-4 years on average. Paying off your debts without help from a debt settlement agency is a much longer process. If you consider Chapter 13 bankruptcy, consolidation, or credit counseling, they often average 3-5 years before you become debt free.
Less Harm To Credit Score
Another benefit to debt settlement is you can keep your name and credit score in good standing instead of ruining it completely with bankruptcy. A successful debt settlement solution cannot be found easily as it is not a public record. Those who really need to know, they will have to pull your credit report. For bankruptcy, all a person has to do is pull bankruptcy records from a basic subscription site or from a courtroom.
It Is Possible To Keep Credit Cards Open.
If your credit cards have not been closed by the time your debt settlement program has started, they may be able to allow you to keep them open. Unless the arrangement clearly prevents you from using your current cards, which may be possible if you owe a bunch or have fallen way behind in payments.
In many cases, though, you can keep them open and even use them. It is ideal for keeping cards open to avoid damaging your credit score. If you close your cards, it decreases your overall open balance and increases utilization. However, not using them unless really necessary is the best approach. Many consumers who enter settlement use the extra money each month to create a nest egg to cover emergencies, so they do not have to touch their credit cards until they are fully out of debt.
It Becomes Easier To Manage Debt
Managing debt is a lot easier when you are settling a bunch of creditors at once because of a single payment. You will no longer need to remember various payment dates and amounts. You will have one monthly installment at a set price.
Save Money With Lower Interest Rates
When grouping all of the debts into a single balance, you will likely have a much lower interest rate compared to a credit card or personal loan. This reduces your payment amount, and the lower your payment, the more you have each month to care for yourself or your family again.
Disadvantages of Debt Settlement Services in Hesston, Kansas
There are various things about debt settlement that makes people try to avoid it when other options are available. For example, debt relief methods such as debt consolidation, debt counseling, or management are more ideal approaches to financial freedom. It can take longer, but these methods will not lower your credit score or prevent you from getting future loans.
If you are sure the only options left for you are debt settlement or bankruptcy, that’s a different story. While settling is not as drastic as bankruptcy, there are no guarantees that it will be successful. This can cause you to fall deeper into debt while the negotiation process is taking place, which can last months. Although if debt settlement is not successful, you can always try bankruptcy as a last resort, you cannot try debt settlement if you attempt bankruptcy first and fail.
Overall, debt settlement is more difficult than making your payments. But, if you’re unable to do so, you’ll want to be fully prepared and understand both the benefits and downsides of your decisions.
Collateral is often a requirement for obtaining a settlement, which means putting your valuable assets at risk. For example, you may use your vehicle or home, depending on the amount of debt owed. If you miss payments, it can forfeit the terms, and you lose the property put up for collateral. This assures settlement companies that you are serious about getting out of debt and intend to repay, but in the event you cannot, they will be covered. This is nothing against you as a person, but if you’re looking into debt settlement, you won’t be viewed as the most financially trustworthy individual.
Hidden Fees are a Setback
When you rush into things because they sound great, you’re being offered a monthly payment that is a fraction of what you’re currently struggling with; you could easily be paying more than you need to. Many times, there are fees added in addition to the application cost and service charges. Unless you ask, they may not volunteer every individual charge.
They may only offer longer-term repayment periods, for example. This gives you the lowest possible monthly payment, but you will pay more interest over the course of a 3-4 year term than you would a 1-2 year term. While you’re paying less each month, you could be paying more than you originally owed by the end.
Settled Debt May Be Taxed
Based on your circumstance, you could be expected to pay taxes on the settled amount. This greatly depends on how the creditors report the write-off. If they report it as “settled,” chances are the IRS will consider it taxable income.
Average Cost of Debt Settlement Services
Every debt settlement agency is different, charging between 10% or more of total settled debt. The average is between 10% and 20%. There are two ways to be charged, based on total debt at the time of application or percentage of the settled amount. It is recommended to go with the latter when possible.
How Does Debt Settlement Work?
The process is rather simple, you choose a debt settlement company to contact creditors on your behalf. You’re paying for their skills and experience in negotiating with collectors to get the lowest payoff possible. Once the creditors or collectors agree to an amount, you will have a single payment to make.
Sure, you could attempt to do this yourself. However, collection companies and creditors deal with consumers trying to get out of paying debt every day. They have tactics to avoid giving in to you; having a debt settlement company working for you creates leverage. Why? Because if debt settlement is not successful, they know bankruptcy is next, and they might not be paid at all.
Most Common Reason People Choose Debt Settlement
Avoiding bankruptcy, of course. Bankruptcy was once considered an optimal method for getting out of massive amounts of debt. Kind of like a fresh start. But, with the popularity of debt settlement services, that is changing. Now, bankruptcy is considered a nightmare that takes forever to rebuild from and never goes away. It is not going to impact credit after 10 years but will remain on credit reports and could make every future application a challenge.
How to Find Debt Settlement in Hesston, Kansas
The first step should always be to research any debt settlement business, and contacting your Attorney General is the most effective way of doing this.
Ensure to have a list of questions ready when you contact each company. Ask things such as how much do they charge? How long do they estimate the negotiations to take? What services are included? If they ask for a large fee upfront, keep looking for another. The only upfront cost should be a small application fee.
Finding a business that is willing to meet in person is ideal. You will often get a better quality of service this way compared to dealing with online or phone support. Those methods are fine for making payments later, and many agencies will offer a combination of these or all three.
Do not believe that a business provides free services, discounted rates, or even that they are legit just because of a non-profit label. Many times you will find these debt settlement companies charge much higher rates or try to hide fees using deceptive business tactics.
Finally, look online for testimonials to get an idea of how others have had experiences with the company.
