Guide On How Debt Settlement Companies Work
Debt settlement services is an attractive option for people who are unable to afford the monthly repayment fees. It is a good alternative to bankruptcy because bankruptcy comes with serious consequences. It takes longer time for a bankruptcy record to disappear from your credit report. Therefore, the best way to resolve your debt is through a debt settlement. The following are some tips on how debt settlement company work
1. Debt Settlement Deposit Account
The debt settlement company will set up an account. You have to keep on depositing money into this account until it reaches the level that allows them to negotiate with the creditor. The lesser time you take in depositing the required amount, the faster they can work with the creditor to agree on the settlement. You should do everything you can to help your account reach the satisfactory level of funds in the shortest time possible. For example, you can deposit bonus, and tax refund into your account
2. Lump Sump Payment
With debt settlement, the creditor is now accepting a large one time payment instead of a minimum payment every month. The debt settlement company will send the deposited amount in your account to the creditor once they reached the settlement. Although the priority is to clear your debt amount, you should always remember to set aside emergency money in case of some unforeseen circumstances. You must make sure that the money you are living on will not leave you in a difficult position.
3. Give Your Contact Information to the Debt Settlement Company
You have to provide your most recent contact information to the debt settlement company so that they can keep you up to date on the negotiation with the creditor. As soon as they successfully negotiated the settlement, they will notify you. Usually, you will be charged a success fee at this point.
4. Read the Settlement Agreement Carefully
You must make sure you understand the details of the debt settlement agreement. You should keep a copy of the agreement so that you can refer it whenever you have any question.
5. Collection Calls
Most people who sign up for debt settlement services are already delinquent for some time. Usually, people with delinquent accounts will get a lot of collection calls that threaten to take legal actions against them. If you are afraid of dealing with them, you can contact your debt settlement company. They have lawyers that can help you to handle the debt collection situation. You have to submit all the legal documents so that they can review the case.
In conclusion, debt settlement might be the solution if you really feel that there is no way out of your debt situation. It will help you to get out of your debt problem with a much lesser amount compared to the original amount.