Discovering Debt Settlement in Home, Kansas
It is important that you know the following information about debt settlement and bankruptcy before you file bankruptcy or sign up with a debt settlement company. It is also crucial that you know when debt settlement would be the best option and when to sign-up with one.
Debt settlement should not be your first option, but once all your other options are out the window, it is always best to go with a debt settlement company as opposed to bankruptcy.
What Does Debt Settlement in Home, Kansas, Have to Offer Their Clients?
A debt settlement company in Home, Kansas, can generally negotiate the total of the debt you owe (whether it is one creditor or several) reduced between 40 and 60%, which means the amount you will pay back could be as little as half the amount you actually owe, or more.
If you are one of those people who does not enjoy talking over the phone, especially with creditors and/or collectors, then you will love this part, for the debt settlement company will do all this for you. A good debt settlement service will work hard to get your interest rates and monthly payments lowered.
What Makes People Select Debt Settlement Over Bankruptcy?
The main reason is that bankruptcy not only stays on your credit profile and credit report for 10 years, but it will also hang over your head and follow you for as long as you live. Every time you go to fill out an application for a home loan or any other kind of loan, as well as for employment, credit cards, etc., there will be a question on the application which asks, “if you have ever filed bankruptcy?”
Now, you could lie and say no, but when you are caught, it will be considered fraud. It will cost you the job if it is on an application for employment, you will receive a fine, and you could get jail time. It is best not to lie about it!
When you go through debt settlement services, you will only have to deal with making only one payment each month. You also get out of having to talk with the collectors and/or creditors because the debt settlement services will also do that for you; great, huh?
So, some of the reasons are reduced debt, a single payment, and easier to recover and rebuild your credit.
Some Of the Advantages and Disadvantages of Debt Settlement Programs:
The Advantages:
Debt settlement services know how to go about talking with your creditors and collectors and how to get them to come to an agreement while negotiating with them to get your interest rates and monthly installments as low as possible.
The debt settlement company starts an escrow account for you, and they put every bit of the monthly installments you send into this account; it is your money. You also have the right to any and all interest it makes while working with them to settle your debts.
Some debt settlement companies will even help you after your debt has been settled to repair your credit standing.
Financial management becomes much easier when you are settling multiple debts. You will not have to juggle as many dates around and risk forgetting to pay one of your many creditors.
Lowers stress levels because you are not having to constantly worry about which bills to pay and where the money is coming from. This, in turn, can have a positive impact on your physical and emotional health too.
Lower payments mean having extra money each month. Of course, you could choose to make extra payments or choose a larger monthly payment with a shorter repayment period if you’re able. This would save you on interest over time. However, with extra money each month, you can also use it on self-care if you were unable to before.
The Disadvantages:
You have to be willing to do your research in order to find a good debt settlement company. It is too easy these days to be scammed by the wrong companies.
You will be charged for facilitating their services, but it should only be a small amount upfront for the application. Many debt settlement companies will charge between 10% and 20% of settled debt for their services. You do not pay this until after they have settled at least one of your debts.
You, Will, Have to Pay Taxes on Your Settled Debts!
When collectors and/or creditors send the information to the IRS that your debt has been settled, the IRS will expect to receive a 1099-C with your tax returns for that same year. As the creditors and collectors report, if your debt has been settled, charged off, paid in full, or whatever, that is when the government considers your settled debt taxable.
The creditor and/or collector are supposed to send you a copy of the 1099-C that they send to the IRS, and this must be filed with your tax returns for that year.
What Will the Debt Settlement Company Cost Altogether?
They will figure out charges one of two ways, which will either be a percentage of the initial debt you enroll with or a percentage of the amount they save you during the time you are working with them. The latter is the best, as it leaves them with more of an incentive to work harder to lower their monthly interest and payments. This is because if they take the percentage of the amount you saved, they will try harder to get it as low as they can.
On average, debt settlement companies have their application fee and a 10% to 20% service fee. The total for the service fee is going to depend on which approach the debt settlement company charges. It is recommended to find a company that charges a percentage of the settled amount and not for the total debt owed when applying.
For example, if you owe $60,000, and the debt is settled for 50%, you would owe $30,000. However, if the debt settlement company charges 10% of the total debt, their fee would be $6,000. Whereas, if it was a percentage of settled debt, the service fee is only $3,000.
How Does Debt Settlement Function?
After a debt settlement company receives all the information they need from you, it will review it all and determine what it will be able to do for you. They do everything so you will not have to. Everything from talking with your creditors and collectors and negotiating a much lower amount for you to pay them back to opening an escrow account for you to send your monthly installments to. The debt settlement services will always have you approve the offers prior to making an agreement.
The good thing about them doing the work for you is that you do not have to contact your collectors or creditors. Many debt settlement companies will also help you with repairing your credit when you have settled all your debts.
If by chance, your creditors and/or collectors refuse to negotiate the debt, services will even help you to file bankruptcy. This is not too likely to happen as the creditors and collectors are glad that there are debt settlement companies as it is the only option they have left to get any of their money back.
Debt Settlement Companies Are Likely to Ask for Collateral
Debt settlement companies may ask for collateral to give them some assurance that they will either be getting some of their funds back one way or another. This means you will be risking the home you live in or else the only transportation you have. If something goes wrong and you are no longer in the position to keep up your monthly payments, you could lose what you put up for collateral.
However, with bankruptcy, you are forced to sell off any assets of value, including your home, to repay debts. With debt settlement, you only lose your home if you stop repaying the settlement.
Do Your Research Before Signing Anything!
Though lower monthly installments, especially lower rates, may seem attractive, accepting a longer period of time to make your payments may cause you to end up paying more in the long run.
Do the Following Prior to Signing with A Debt Settlement Company in Home, Kansas:
Contact the local consumer protection agency in Home, Kansas, and get in touch with Kansas’s Attorney General; they will be in the position to let you know about the company(s) you are interested in. If they are registered, they will be able to tell you whether there are complaints or grievances against them.
Include the Following in Your Homework
You should be able to search and find out the amount of time it will take to settle your debt(s), how much you will be charged, and the different services they will provide you. Just go to the next one on your list if you come across a company that asks for a huge sum upfront. You should also find out the amount you will be investing into their services.
Try to find a company that is willing to talk with you in person, over the phone, and online. All of these ways are recommended. Find out if they will let you speak with a professional and not just a telephone advisor. Just because the title has non-profit status in it does not mean there is no charge, affordable or legit. Many debt settlement companies cover up the fact that they are charging outrageously.
