Best debt settlement - How to get rid of debt without filing bankruptcy
If your debt is overwhelming and you're finding you cannot pay your bills on time and would like to avoid collection calls, it may be time to consider debt settlement. Debt settlement is the process of negotiating and reducing your outstanding debt by as much as 40-60% of the amount you originally owe. The remaining debt amount is forgiven by the creditor, allowing you to get out of debt faster.
How does debt settlement work
The best debt settlement companies negotiate with your creditors to settle your debt for less than what you owe. The companies charge an upfront fee for their services. Below is an example of debt settlement at work:
Veronica owes a total debt of $50,000 on 5 credit cards and is finding it difficult to keep up with minimum payments. Veronica does not want to file bankruptcy so she enlists the services of a good debt settlement company (ABC). Here is what happens next:
Stop payment to creditors. The representative at the debt settlement company (ABC) asks Veronica to stop paying her creditors and instead deposit a certain amount monthly into a savings account (a trust account that ABC creates for Veronica).
No more handling of collection calls. While Veronica starts falling behind on her payments, she may receive collection calls, which are handled by the representative at ABC. Veronica does not have to handle any collection calls herself.
Negotiation starts soon after. Once Veronica accumulates a good amount in the trust account, the representative at the debt settlement company starts negotiating with her creditors.
Debt is reduced by 40-60%: Finding that Veronica can't pay off her debts in full, her creditors agree to accept a reduced amount, say around 40-60% of the original amount owed.
While Veronica pays off one debt, she waits for better offers from other creditors. She makes sure that any extra money coming in will be used to pay off her bills. Finally, after a period of about 2 years, Veronica is able to settle all her credit card debt.
What debts can you settle
Credit card debt, medical bills, gas/store cards, personal loans etc can all be settled. Debts that cannot be settled include tax debts, alimony, child support, mortgages, car loans and federally insured student loans.
How much does debt settlement cost
Debt settlement companies typically charge 20-30% of the debt balance that is forgiven under the program.
How long does debt settlement take
It usually takes 2-4 years to complete a debt settlement program. The period of completion depends upon your total debt amount.
Can creditors sue after debt settlement
Once you negotiate debt settlements with your creditors, they may not come after you for the balance. It is illegal in many states such as Arkansas, Texas, Georgia, Michigan, Washington etc. However, in other states such as Alabama, Delaware etc, the creditor retains his right to sue you under certain conditions.
Tax implications of debt settlement
Once you settle your debt, creditors will forgive a percentage of what you owe. This forgiven debt, known as cancellation-of-debt (COD) income, is taxable as per IRS guidelines
How to find the best debt settlement company
If you think debt settlement may be for you, then the next step is easy because we've done the legwork for you! We've painstakingly reviewed hundreds of debt settlement companies to see if they meet our high standard of excellence and quality and whittled the list down to 3 that meet our stringent requirements. All our debt settlement companies are extremely reputable and experienced and can help you get back on your feet in no time.
All you need to do is fill in your contact information in the form on the top left of this page and the top 3 best debt settlement companies will contact you and offer you their best debt settlement package. You get to sit back and choose which company will handle your debt settlement. Contact us today and start getting back on track financially!
