Debt Relief Options in Dumbarton, Virginia
Are you wondering what the cheapest way to get out of debt is? If you are unable to continue making payments to get your debt paid off, there are several options available. Look for debt settlement programs in Dumbarton, Virginia.
With the current state of the economy, more people are struggling to cover their debt. This is causing a boost in debt settlement applications, and creditors are becoming more accustomed to being contacted by these agencies.
Hiring a debt settlement agency in Dumbarton, Virginia, is easy to do. You just need to know what to look for and how to weed out low-quality companies. Otherwise, if you are struggling to pay off over $10,000 in debt, this may be the right time to apply. Consumers can get help paying off past-due utility bills, credit card debt, and rent payments, among various other types of consumer debt.
Debt settlement may help with student loans and business loan debt, depending on the situation. If you need debt relief, you may find it worth calling to find out how a debt settlement program can assist you.
What Are Debt Settlement Programs?
Are you questioning the reason so many people choose a debt settlement over other debt-relief options? The main reason is to avoid going forward with bankruptcy.
Debt Settlement Risks and Strategies
Debt settlement may be the cheapest option and is always a better choice than filing for bankruptcy. However, it is not meant to be the first choice for getting yourself out of debt. In fact, they are only recommended as a last resort because it does cause your credit score to go down; in many cases, it will take up to 3 years to rebuild your credit score.
However, unlike with bankruptcy, you will be able to rebuild your credit score much sooner with debt settlement. A bankruptcy claims to be off your record after 10 years, but it will always show on the credit report when being pulled by employers, property owners, or creditors. They will always ask you about the bankruptcy on the report, even after the 10 years is up.
Depending on which debt settlement company you choose, you could be stuck with hidden fees if you are asking the right questions or reading the fine print. They will have a small upfront fee for the application process, but past this, they have to include any fees within the repayment period. Because of this, it can be easier than you think for them to sneak various hidden fees in, such as monthly maintenance fees and setup costs.
Another concern could be the IRS taxing your settled debt amount as taxable income. The IRS doesn’t hold back just because you’re having financial issues, and they do expect to be paid too. This may not be a major issue if you’re overall debt is on the lower end, but for people with tons of debt, it can be an issue. For example, if you’re trying to settle $50,000, $100,000, or more, you should probably talk to a tax expert before moving forward with a debt settlement.
For example, if you were to have 50% of $100,000 in debt settled, the IRS can and most likely will tax the $50,000 settled amount.
Bankruptcy Vs. Debt Settlement Plan
When debt settlement works as it is meant to, then it can benefit all parties. Consumers will get help lowering their overall debt owed and regain control over their financial life in a shorter amount of time. Debt settlement companies will earn money for their services. Creditors will receive more payment compared to if the consumer was to fully stop paying or apply for Chapter 7 bankruptcy.
The way Chapter 7 bankruptcy works is by liquidating any non-exempt assets the consumer has and using the money to pay creditors back. However, if a person is at that stage, they may have little to no valuable assets left, and there may be no proceeds to give to creditors, and they realize this.
Exempt assets will be different for each state but commonly include personal and household possessions, retirement accounts, a vehicle, and a part of home equity. This means, as the consumer, you may be required to surrender certain property that you do not want to part with.
Additionally, bankruptcy impacts your credit score for 10 years, compared to just 7 years for debt settlement. Once the 7-year period is over, debt settlement is no longer on your report, but bankruptcy will be visible forever.
What To Know About Minimum Monthly Payments
When it comes to the repayment amount, many people will opt for the lowest monthly payment possible as it frees up more funds each month. While this can be helpful depending on your situation, it is recommended to take the highest monthly payment you are able to afford.
The lower the monthly payment is for your debt settlement plan in Dumbarton, Virginia, the longer your repayment period will be. This means more payments and more interest paid. If you can manage to accept a higher monthly payment with a shorter repayment period, you often still have a lower bill each month than before, and you get out of debt much more quickly.
Ideally, the least amount of payments you can accept, the more you will save over time as you can avoid paying an excessive amount of interest. However, if you have to accept the lowest monthly amount, you could ask if the debt settlement agency allows making extra payments or penalize for early payoff.
What To Consider With Debt Settlement in Dumbarton, Virginia
When you are searching for a debt settlement company in Dumbarton, Virginia, you want to verify they offer quality and trusted service. To do this, reference the BBB or Attorney General for your state. They will have the official complaints on file, compared to online complaints that may or may not be reliable.
Consider the possible settlement amount, on average, 40% – 50% of your total debt. Will you be able to make the tax payment to the IRS? If you have a lot of debt, this amount could be fairly substantial.
Watch out for hidden fees, and remember that a non-profit does not mean they are offering discounted services. They could include excessive fees in the repayment amount.
How To Spot Debt Settlement Scams
Sadly, debt settlement scams are not a rare find. However, there are a few things to watch out for that reduce your chance of getting stuck with one of these scams or a risky debt settlement agency.
If they claim to guarantee they can eliminate your debt at a much lower rate, avoid it. No debt settlement company can guarantee a creditor will negotiate a lower amount. All they can do is try their best and see what happens.
The high upfront fee eliminates your debt. This is often a tactic to make money by providing little to no services. All they have to do is give it some time, call back and say they couldn’t do much for you.
While these offers sound great, it is not worth the risk. If you get hit with a debt settlement scam, it can cause you to fall even further into debt by thinking creditors are settled.
The best way to find a debt settlement company in Dumbarton, Virginia, is through the Better Business Bureau or the state’s attorney general.
How To Repair Credit After Debt Settlement?
Beginning the first date of delinquency, debt settlement remains on a credit report for 7 years. After a settlement, to repair your credit, you will have to ensure you’re not going over credit limits. Pay every bill on time, and ensure your credit to debt utilization remains low.
If you do all of these things, you will be able to slowly rebuild your credit score over time while getting out of debt.
Final Thoughts On Debt Settlement In Dumbarton, Virginia
In the end, debt settlement is often considered to be the cheapest way to get out of debt once there is no other option. Although, it will depend on how much debt you owe to creditors. Studies have shown to get the most benefit from a debt settlement, consumers need to have over 4 accounts to settle.
When having multiple accounts that you need to settle, the more benefit you will see because it will combine all of your bills into a single payment. For example, if you have been stressing out over paying 8 different credit cards after debt settlement, you’ll have one date to remember.
The biggest thing is to know the different debt relief options available to you, along with the pros and cons of each alternative. The best approach to finding a debt settlement company in Dumbarton, Virginia, is to reach out to a credit counseling agent, a bankruptcy attorney, and a debt settlement expert.
Finally, you want to look for a debt settlement agency that offers multiple contact methods. For the first contact, it is always best to discuss debt settlement in person. Once you have decided to move forward and accept the debt settlement plan, you want to be able to make payments easily online or over the phone.
