Avoiding Bankruptcy With Debt Settlement in Maben, Mississippi
What You Should Know About Debt Settlement
Are you facing bankruptcy because you have tons of debt? Are you unsure what else you can do? This may be the right time for you to look into debt settlement programs in Maben, Mississippi.
When you think your debt is past the point of no return, debt settlement can help get you back on track. Many with consumer debt have successfully paid off debt and rebuilt their credit at the same time using this method. Why not you?
With more people dealing with medical debt, credit card debt, and repaying student loans than ever before, companies are used to working with debt settlement agencies. Even business loans are becoming more of an issue, which can benefit from debt settlement too.
If you have more than $10,000 to pay back and your current situation hinders you from being able to, debt settlement may be the best option for you. Even if you owe more than $100,000 in loans or consumer debt, if you can no longer make payments, a debt settlement company in Maben, Mississippi, can help.
Why Choose A Debt Settlement Option?
Are you wondering why so many people are starting to consider debt settlement programs? You are not alone, and the main reason is that they are no longer in a place to repay their debt and do not want to file for bankruptcy, which should always be the last resort option.
Debt settlement companies are here to help you without completely ruining your credit. In some cases, your credit may not be dinged when choosing to go with a debt settlement. No one wants bankruptcy on their record for many reasons, the largest being it never goes away. While it only impacts your credit score directly for 10 years, bankruptcy remains visible on your credit report to anyone that runs a check. This includes future employers, homeowners, and creditors.
If you were to provide false information about having a bankruptcy on your record, and it is found, you could face fraud charges and jail time. If you lied to an employer, it would likely cost you a job too. Because of these major setbacks to individual bankruptcy, debt settlement is a much better option.
How Debt Settlement Is Better Than Bankruptcy
Although debt settlement options should never be the first choice, it’s better than the last choice: bankruptcy. This is because it only stays on your record for 7 years, and once the period is up, it is removed and does not stay visible. That means you will not have to answer questions about it forever.
If you can repay debt without contacting a debt settlement company in Maben, Mississippi, that will always be the best method to keep good credit. But, it may be possible to get a debt settlement program started with little to no change in your credit score. Most people who choose debt settlement rebuilt their credit within 3-years, and some within the first year.
Does Debt Settlement Rip Off Creditors?
The short answer is no! This is a common belief that simply is not true; debt settlement programs actually help the creditor by ensuring they receive something back on balance. Creditors understand if a person is experiencing financial hardship enough to consider bankruptcy, they likely will not receive anything without accepting the debt settlement.
Debt settlement companies reach out to creditors and negotiate a lower payoff amount. Depending on the creditor, this amount could range drastically. The average is 40% to 60% lower. Therefore, if you owed a creditor $100,000 and they accepted a 60% lower payoff, the debt settlement company pays off the $40,000, and you now repay the debt settlement plan. Had you filed for bankruptcy instead, the creditor may have gotten less and may not have received anything?
Cost of Debt Settlement Plans?
A debt settlement company will usually have an upfront application fee. Past this, their fees are included in the repayment plan, averaging 10% to 20% of the total debt owed. Using the example, 10% would bring the total repayment to $50,000. That is still a lot lower than the original debt.
If you have been making payments for a long time, the creditor may have made more back than you originally owed, to begin with, between the debt settlement payoff amount and interest. You really should not be worried about creditors getting cheated.
In the end, credit card companies, banks, and other types of creditors that approve loans are more likely to accept a much lower payoff amount when contacted by a debt settlement company. It is a clear sign that the consumer is struggling enough to make them worry about getting any more back.
Payback Debt In Less Time
If you are struggling to pay off your debt, the chance is your monthly bills are higher than your income allows you to pay. This could be due to a sudden lifestyle change, losing your job, unexpected medical expenses, etc. A debt settlement program allows you to reduce the monthly repayment amount to a much more manageable rate. This is done by reducing the amount of debt owed and providing a lower interest rate.
If your debt settlement plan is low enough, you can even make extra payments to pay it off faster than the payment period given.
Credit Cards Could Still Be Usable
If you have credit cards with an open balance, you may be allowed to keep them open. Unless the debt settlement plan states a restriction on using your credit cards, it can often give you peace of mind knowing they are there for emergencies. Using them for causal purchases is not recommended, considering you are looking into debt settlement to get out of debt.
Simplify Debt Management
Instead of having multiple bills to pay each month, possibly on different dates, you will have a single monthly bill to manage. This alone can reduce your stress over missing or confusing payments.
Greatly Lower Interest And Monthly Repayment
One of the biggest perks of going with debt settlement is the lower monthly bills. This means you can have more funds to better take care of yourself and your family with little things you couldn’t afford before getting with a debt settlement company in Maben, Mississippi.
The downside of Debt Settlement Programs
There are some reasons debt settlement is not a good idea and why it should not be the first option to get out of debt if there are other methods available to you. First, there is no guarantee that creditors will work with the debt settlement company and may not accept a lower rate. This is not common, but it does happen.
The risk of losing your property is a major concern. To qualify for debt settlement, depending on the amount, you may have to put up collateral such as your vehicle or home. If you do not make payments or, for some reason, can’t, the debt settlement can take ownership of the collateral to ensure they are paid for their services.
Look For Hidden Fees
Some debt settlement companies will try to hide additional fees. Always ask upfront about any fees and services provided for those fees. A low monthly rate and low interest are appealing, but if the repayment period is longer, you could end up paying more overall.
For example, you will pay much more in interest on your repayment over 3 years than you would over a 1-year repayment. The monthly payment on a 1-year term will be higher, but you will be debt free much faster.
Canceled Debt Could Be Taxed
It is possible and often likely that your canceled debt amount will be considered taxable income by the IRS. That means if the debt settlement company negotiates 50% off a $100,000 debt, you could be expected to pay taxes on the $50,000 when the creditor reports it as settled debt.
How Does Debt Settlement Work?
The debt settlement company is providing a service. This includes reaching out to each creditor for you and working on getting a lower payoff amount on the debt you owe. Once they work out deals with all the creditors, you often owe 40% to 60% of what you did. They will then include their fees and explain what your monthly payment will be.
Remember, this is not a first-choice option, and debt settlement should be avoided whenever possible because it will hurt your credit in the short term. But, if you do find one that has great ratings in cost, quality, and track record.
Basic Benefits of Debt Settlement
In some cases, a debt settlement program may not hurt your credit score much, but it usually will ding it some. But, it will help begin to help rebuild your credit as you make payments on time. Most people with consumer debt have been able to fully pay off debt and rebuild their credit back to where it was or better within two to three years.
Building a safety net will take a little time, but the lower monthly payments created by debt settlement, it gives you a better chance to do so. It also helps you build a routine up so you continue being able to save money, even after you have paid off the debt settlement plan.
Most debt settlement companies will reach out frequently to help keep you on track. This lets you know you’re not alone in the journey of repayment and rebuilding. They want to help you get back to a financially stable lifestyle.
Considering Debt Settlement Services in Maben, Mississippi
Start by contacting the Attorney General of your state and asking about any complaints against the debt settlement company you are considering. This will greatly help you weed out companies with poor ratings.
Ask questions before accepting anything. You should know exactly how much you will be paying back, how much the service is costing you, and what services are provided. If a company is asking for a large up-front amount, look for another company.
It is recommended to choose a debt settlement agency with multiple forms of contact, including face-to-face meetings. Statistically, you will get a better rate if meeting face to face than over the phone or online because you can connect better.
Do not assume any debt settlement company offers low-cost or free services, including non-profits. This does not mean they help for free, and often they may be hiding excessive fees that they attempt to cover up or avoid telling you about.
Look online for consumer feedback, and look for negative reviews to see what others have experienced.
