Debt Settlement Offers in Hiawatha, Kansas
Are you going through a rough patch and struggling to make your payments on time? Would you like to be able to dig yourself out of debt without filing for bankruptcy? Good news, debt settlement in Hiawatha, Kansas, can help you without ruining your credit forever.
It is true that debt settlement is a better option than filing for bankruptcy for several reasons, which will be discussed in more detail later. However, there are several reasons you should avoid debt settlement if there are any other options available. Basically, debt settlement should never be used simply to get out of paying the full amount owed because it will likely harm your credit score for a couple years.
If you are unable to make your minimum payments or have to choose between eating and a credit card bill, debt settlement may be something to look into. The following are the pros and cons associated with applying for a debt settlement program and how to choose a good agency.
Choosing A Debt Settlement Agency
You will want to review your options before choosing a debt settlement company because there may be other methods to get out of debt that will not be as risky. For example, debt consolidation or debt management services. If you have decided this is the last option, you shouldn’t go with the first one you see.
Unlike debt consolidation or debt management options, where you will be repaying the full amount, debt settlement tries to reduce the principal debt owed to creditors. The first thing to be aware of with debt settlement is that there is no guarantee that it will be successful. The creditors will have to agree to the lowered payoff amounts. Because of this, it is sometimes referred to as debt forgiveness.
Vetting the debt settlement company is a very important part of the process. If you do not, you could end up in worse shape. Sometimes agencies will try to hide certain charges until you’ve already accepted the terms. This is known as hidden fees. Monthly maintenance, setup costs, etc., are just some of the possibilities. You don’t want to end up paying more than you need to or more than originally owed over time.
Unfortunately, debt settlement scams are a reality as well. The biggest red flag to watch for is a large upfront fee. Many times if a debt settlement company requires a large upfront fee, that is how they make their money and offer little to no effort in helping reduce your debt. You may even be repaying and still owe creditors, causing you to get even further behind with them.
Where To Start?
Accreditation: The first place you want to research your debt settlement company options is with the Attorney General or Better Business Bauru (BBB). These places will have only official complaints registered, unlike online review sites that can be easily manipulated.
Fees: Ask what the fees are. Is it a reasonable upfront cost for the application fee? Are they asking for a large fee? Are they transparent about the fees for their services? Always find out what the long-term costs are going to be. This lets you know if they are charging a reasonable percentage of the debt.
Are they charging based on the eliminated debt amount of the fully settled debt? If you owe $40,000 in debt, and they charge 20% of the settled debt amount, that’s $8,000. However, if they charge on the eliminated amount and get the debt reduced by 60%, their service fee would be 20% of $24,000 (the eliminated debt), or $4,800). Obviously, the second method is the cheapest.
Customer Satisfaction: Review previous ratings and see if they have any negative reviews. If so, how bad are they, and what are they referencing? Always read both good and bad reviews from other customers to learn about a company.
Contact Methods: Are they online only, or do they offer in-person meetings? It is always best to have your first meeting in person so that human connection exists. This is something that studies have shown is not the same when talking over the phone or applying online. Choose a debt settlement company that provides all three options of contact, in-person, online, and telephone.
Time in Business: The longer a company has been in business, the more indication they are doing something correctly. The longer they have been successful, the more likely they are able to negotiate with creditors and work out a deal. This is an area where experience is valuable.
Now that you have an idea of what to look for to avoid debt settlement scams, it is time to discuss the advantages and disadvantages attached to debt settlement.
Reasons To Avoid A Debt Settlement Program
Before you decide to move forward with a debt settlement plan, you should consider the following factors:
High Costs: Depending on the amount you owe, you may be encouraged to stop payments to creditors and put the payments into a savings account for several months. Some may require you to put up collateral using a vehicle or your home for assurance. Then, if you are unable to make your payments, you can lose the property put up when they repossess it.
No Guarantee: Debt settlement companies can only be helpful if the creditors agree to the lower payment amount. If they do not agree, there’s not much the debt settlement can do to help. Meanwhile, you may have stopped making payments during the negotiation period.
Damaged Credit: It is common for debt settlement companies to encourage you to stop making payments to creditors for an extended period to make them more likely to accept a deal. However, this will greatly damage your credit. Also, your creditors are adding on late fees, penalties, and interest, which puts you further into debt. Creditors may begin aggressively calling and could end up suing for payment.
How Debt Settlement Is Better Than Bankruptcy
If you are at the point where you’re debating which option would be better, bankruptcy vs. debt settlement, the following may help you decide. The main, and really only, upside to bankruptcy is that it can be a faster process to get creditors to form harassing you while not having to pay taxes on the erased debt. Overall, debt settlement tends to have more advantages than bankruptcy.
Both options will impact your credit score, but debt settlement will be wiped off your report after just 7 years. Bankruptcy, however, impacts it for 10 years and remains on your report for future employers and creditors to see. The biggest issue with this is that they will always be asking you to explain the situation, and it makes a bad first impression. Also, when creditors and employers see debt settlement, they know you made an effort to repay what you owed.
Debt settlement can drastically lower your total amount owed. Depending on the amount owed, the number of creditors, and other factors, a debt settlement company in Hiawatha, Kansas, could help reduce debt anywhere from 20% to 80%. On average, debt settlement can usually negotiate between 40% and 60%.
For debt settlement, you may be required to put up personal property as collateral, which you keep as long as you can continue making the agreed payments. This is an assurance that the agency uses to ensure you stay motivated to repay them. However, with bankruptcy, you will have to liquidate any valuable assets, with the exception of a very limited list of exempt assets. For example, you may have to sell your home, only being allowed to keep a small percentage.
Debt settlement will eventually help rebuild your credit score back up over time as you continue to make payments on time. That is not an option with bankruptcy.
With debt settlement, it is possible you will still be allowed to keep credit card accounts open for emergency use. You may be approved for loans or cards much earlier than if you open bankruptcy as well.
What To Consider When Applying For Debt Settlement In Hiawatha, Kansas
Before you make the final decision on which debt settlement company to use in Hiawatha, Kansas, you will need to consider several factors.
First, are they a trusted and experienced company? Look at how long they have been in business. If they are newer, then they may not have the experience needed, and the reviews you find could be premature. The longer a company has been in business, the more likely they are to be doing something correctly.
If you haven’t, research them through the Attorney General’s office for your state and on the BBB website. When people report issues, and they are found to be legitimate, they will know. You can also look online for what others are saying about each debt settlement agency you are considering.
Can you tell if they are being upfront about their fees, or do they seem to be hiding something? What services do they include with their fee?
Be alert when it comes to non-profit organizations. That does not mean they are going to be providing lower-cost services or free debt relief plans. In reality, they can be tacking on larger fees into the repayment plan, or they may only offer longer-term options. This will make your monthly payment lower, which looks appealing, but over time you will pay much more on interest than you need to.
Consider taking a little higher monthly payment option to get your debt paid off faster, with less paid interest. Many consumers tend to forget about the interesting aspect of the repayment and only focus on how low they can get the monthly payment to be. Don’t make that mistake.
Final Thoughts
If you are able to find another way to pay off your debts, that is always going to be the best method to use. If you have run out of ideas or ways to repay your debt and you want to avoid bankruptcy, then a debt settlement plan in Hiawatha, Kansas, is likely the route for you.
