Find the Best Way Go Debt Free
Debt Settlement—How Does it Work?
Also known as debt relief or adjustment technique, this is a process of resolving delinquent debt for far less than the amount owed. That’s perhaps, the prime reason that makes this option attractive. The debtor promises the lender a lump-sum payment—ranging from 10 to 50 percent of the owed amount. Put simply, debt settlement saves consumers money as it helps resolve their debt for less than their full balance.
However, it is crucial to understand that debt settlement only works for unsecured debt like credit cards. Plus, they work only if the creditor thinks that you won’t pay at all.
The technique works by first putting a halt to all monthly payments on that debt. The debt incurs late fees and high interest. Meanwhile, you open a savings account and put monthly payments there. Once you have a lump-sum amount in the savings, account negotiation is carried out with the creditor for a settlement.
Debt Settlement – Risk Involved
Debt settlement is risky. Here’s how:
- Penalties and interest may increase over time which can damage your credit score
- You are exposed to the high risk of being sued
- The forgiven debt is nonetheless taxable
- Creditors are under no obligation to lower the debt or agree to the settlement, so there is no guarantee of success
Alternatives to Debt Settlement
As debt settlement is a risky process, at Master Credit Report, our debt counselors help you assess and evaluate alternatives. We help you find the best strategy to pay off debt and experience financial freedom.
Some alternatives of debt settlement are:
- Debt Consolidation – Allows you to create a loan that combines several debts into one manageable monthly payment. Moreover, the interest rate is lower than what you may be paying at present.
- Bankruptcy – Chapter 7 bankruptcy can sully your credit history for years, but it can help erase your debt. Besides this, the process of rebuilding your credit can start immediately.
- Balance Transfer – A balance transfer is a debt management strategy that allows you to move debt from one credit card to another. This is mostly carried to take advantage of an introductory zero percent interest offer on the new card.
At Master Credit Report, we believe no two clients or situations are the same. Therefore, we provide every client with a customized debt management plan with the right mix of strategies and arrangements that works for their situation. Rest assured, we create a tailored action plan that works best for your situation and allows you to pay off your debts promptly and regain financial control.
For more information or assistance, contact us today.
Let us help you pay off your debt smartly.
Don’t let growing debt cripple you financially.
Contact us today to take financial control.