Debt Settlement Solutions Help With Consumer Debt In Elkton, Virginia
Do you suffer from financial debt? Feeling lost and don’t know where to go? Is it difficult for you to pay off your monthly credit card bills because they consume a large portion of your income? If you were able to answer yes to any of these questions, debt settlement in Elkton, Virginia, may be worth looking into further.
When individuals experience unexpected financial burdens, it can be hard to maintain debt repayment. In these scenarios, debt settlement may be the best solution.
More people are choosing debt settlement to help dig themselves out of debt from medical costs, credit card bills, and student loans. Perhaps the debt-to-income ratio has become too much.
From losing a job to large unexpected medical procedures, each person has a different situation. However, a debt settlement plan may be the ideal approach. From having $10,000 in debt to owing $100,000+ debt settlement in Elkton, Virginia can help.
Advantages of Debt Settlement in Elkton, Virginia
Although debt settlement should not be the first option you consider and rush to apply for, it does have some advantages over the only other option, bankruptcy. The first advantage many people consider is how it impacts the credit rating. It affects it for a much shorter period, with many people rebuilding within the first year and within three to four years on average.
In addition, debt settlement is easier to explain when applying for future loans, credit cards, or new jobs. Debt settlement does not have the negative impression that bankruptcy does, which could prevent you from being approved for new applications for years.
In some situations, your debt settlement plan may allow you to continue using credit cards. Unless it has stated otherwise in the agreement terms. This can be helpful as a backup if emergencies occur unexpectedly. However, continued use of credit cards for casual purchases is not recommended, as it will be counter-productive to the debt settlement plan.
Debt settlement will be permanently removed from your credit report after 7 years. After this, it will not be viewable by creditors, employers, or anyone that pulls your credit report. Unlike bankruptcy which stays on credit reports for 10 years and could be viewable for much longer.
Disadvantages of Debt Settlement in Elkton, Virginia
Loss of Property
One of the biggest risks of a debt settlement is your property. In many cases, you will have to provide some type of collateral to assure the debt settlement company they will get paid in some form. This is usually a vehicle or a house, depending on the amount of debt. In the event you cannot repay the debt settlement plan as agreed, they can take ownership of the collateral.
Canceled Debt, Taxed Income
In many cases, you may be required to pay taxes on your canceled debt amount, depending on how the creditor reports it. For example, if you owe $100,000, and the debt settlement company can lower that by 50%, and the creditors report it as resolved consumer debt, the IRS considers it as taxable income. In addition to paying back $50,000 for the debt settlement, you will owe taxes on the resolved debt amount.
Hidden Fees
There are some companies that include additional fees that you may not realize without doing your research. First, always ask up front about their application, service fees, and what they include. Also, look into testimonials, online reviews, etc., to see if there are any complaints about excessive fees.
Also, be aware that just because a debt settlement company states they are non-profit does not mean they provide cheaper services. In fact, many of these companies use the non-profit term to hide excessive fees! Again, if you have any non-profit debt settlement agencies on your list, do your research.
Is Debt Settlement Services Affordable?
If you do your research and find a reputable debt settlement company, it should be much more affordable than your current situation. The only upfront cost is a small application fee. The remaining costs are genuinely added to the repayment plan at 10% to 20% of your original debt balance. While this may sound like a lot if you’re faced with a massive amount of debt, they can usually work out 40% to 60% off your debt owed. The amount owed will still be much lower, and the monthly payment is often much lower depending on the repayment period.
How Do Debt Settlement Companies Work?
A debt settlement company is there to help make it a bit easier to get out of debt without filing for bankruptcy. To do this, they charge an application fee and tack on a percentage of your original debt to the repayment plan offered. They usually include 10-20%.
However, in return, they contact all of the creditors you owe, negotiating a lower pay-off amount to help lower your overall debt. Because creditors and banks often agree to 40% to 60% less than owed because they are guaranteed to receive some type of payment through debt settlement. Whereas, if they decline and the consumer files for bankruptcy, they would get even less and may not receive anything else.
Many people believe debt settlement is designed to rip off creditors, but it actually helps ensure they are getting paid back something, while the consumer is able to get out of debt a bit easier, with less of an impact on their credit report. Not to mention, creditors probably received more in interest payments than originally owed if you’re at the point of no return.
Always research the company you consider submitting an application with. Each provider varies in cost, standards, and overall track record. You want to choose one that succeeds in all three areas.
Largest Benefit of Debt Settlement Vs. Bankruptcy
One of the largest benefits of choosing debt settlement over bankruptcy is how it affects the credit score. Instead of ruining it for a decade, it may not reduce it at all. If it does, it is usually just ding and for a short period. A debt settlement plan can actually help you rebuild your credit as you make payments on time each month.
In most cases, it only takes 2-3 years to pay off and rebuild your credit. Some people have reported their credit score to improve within 12 months. That is much faster than bankruptcy offers, which stays on your credit report for 10 years instead of 7 years. Additionally, bankruptcy can continue to show on your reports forever, while debt settlements are removed after the 7-year mark.
Most credit settlement companies will reach out on a regular basis. This is to help you stay motivated, and it lets you know that you’re not the only one invested in getting you back on track.
Shopping For Debt Settlement Plans in Elkton, Virginia
There are several ways to research companies, such as reaching out to local organizations and contacting the Attorney General for your state. These places can tell you about serious complaints made against a business.
Some things to ask any debt settlement company you consider include what charges they include, the timeframe of repayment, and what services they provide. This helps reduce the chance of getting stuck with hidden fees after applying. You will also know how long they offer for repayment and what they are providing in return for their fees. Remember, the longer the repayment period, the lower your monthly bill, but the more interest that will be paid over the repayment period.
Do not assume that a debt settlement in Elkton, Virginia, or anywhere will provide cheaper or free services simply because it’s non-profit. Unfortunately, these are often the companies that stick consumers with excessive fees.
Try to find a company that offers multiple methods of contact, including in-person meets. Over the phone or the internet are useful, but for the first impression, it is always best to meet in person. This helps create a connection rather than being just another number. Take your list of questions with you, and take notes to compare later.
Finally, review online testimonials about each company you are considering. Don’t just look at the positive; focus more on the negative feedback left. Go over your own notes and make your final decision as to which would be the best fit for your individual situation.
