Is Debt Settlement Ideal for Everyone? What Do Experts Suggest?

Is Debt Settlement Ideal for Everyone? What Do Experts Suggest?
When it comes to debt settlement, you should consult experts in the field and ask them whether it is convenient for you or not.
There are several options for you to consider before you contact creditors for negotiation of the settlement. You should discuss the terms and conditions of the settlement with experts so that they can guide you in the field. 

What are the alternatives available for you when it comes to the creditor payments?

Creditors in the field will help you to reduce your interest rates, or they will allow you to stop making debt payments for a few months till you are in a position to get back on your feet. This is called forbearance. In case your financial issues are temporary, you can embrace the above options for debt settlement. You should create a budget and check the amount you can pay every month. You should later call up the credit card companies and explain to them what your situation is. You should work with credit counselors on an effective debt management plan. Here, your counselor will later contact creditors and get your late fees waivered. In this way, you can reduce the interest rates. Here, you can make a payment to the counselor and get your fees waivered. 

Debt consolidation for your loans

If you have many loans with high-interest rates, another option is to opt for debt consolidation. Here, you have the option to combine them in a single personal loan with a reduced interest rate. You also can make transfers with your credit card that provide you with about 12-18 months with zero percent APR. Experts in the field of financial management say you should not take out a line of credit in the form of home equity to pay off your unsecured debts. When you are able to negotiate correctly, debt consolidation reduces your monthly payments into something affordable. 

Debt settlement and negotiation with your creditors

When you are entering into negotiations for debt settlement, the best way is to save a lump sum. Creditors will take the cash available over a debt repayment plan the moment you will stop the payments. If you have a monthly bank account, make sure you convert it into a savings account so that you can build a lump sum. In case, you wish to consider making payments each month, opt for something else other than debt settlement. If you cannot save money every month, consider bankruptcy however you must take professional advice before filing for bankruptcy.  

You can only build a lump sum when you stop paying unsecured creditors. However, you must keep one thing in mind; these creditors can call you and sue you for the breach of the repayment contract once the payments have stopped. If you opt for debt settlement, your credit score will be adversely affected. 
Evaluate debt settlement feedback from different companies 
If you are looking for credible debt settlement companies, you must take into consideration debt settlement feedbackfrom these companies

When you are entering into a debt settlement process, start to draft the debt negotiation letter You can begin the negotiation process by writing an opening letter for debt settlement. Every creditor must get a different letter, and it should contain your account information. In the letter, you must explain to the creditor why you cannot pay the debt. Here, you must give the creditor all the information about the payment process. The letter should be customized as per the creditor you owe the payment to. You can also explain to the creditor any kind of adversity you might face like loss of health or job.  You should also state how much you are willing to offer to settle your debt. For this, you must begin with a low amount. In the letter, you should clearly mention how much you are willing to pay for settling the debt. For instance, you can offer to pay off around 30% of the debts you owe. 


When it comes to bankruptcy, make a mention of it in the letter. Bankruptcy is your reason for your creditors to be eager to get into a settlement. If you file for bankruptcy, you get a good incentive for debt settlement. 
When you include a request for bankruptcy, you must ensure that they include in the report that the payment has been made in full. You can also ask the creditors to remove other negative information in the credit report. You should send the letter via certified mail and ask for a return receipt. 

Creditor negotiation

When you are entering into creditor negotiation, you will find he or she will call or respond to you in writing. Make sure you ask them to make their counter offers in writing. Creditors can easily deny something they have offered orally. This is why you must always have a paper trail. When you have received the counter offer from the creditor make sure that you have a paper trail. When you are talking to the creditor, you should always make a note as to whom you have spoken with. 

This will help you keep track of communication done with the creditor.  You should also make a note of the date and time of the conversation. In case, the creditor does not agree to the amount you wish to pay, write a second letter and increase the amount. In this way, you will get a response. Keep track of the number of letters you write to the creditor. Keep a file of these letters as this will come in handy in the future. 
Therefore, when you are looking for debt settlement companies, ensure that you keep the above points in mind. You can also decide to cease negotiation with creditors if you want to. In case, many creditors have decided to settle your debts you can free up some money to repay the remaining debts. In this way, you effectively can become debt free and eliminate tensions with success. 

Author Bio

Marina Thomas is a marketing and communication expert. She also serves as a content developer with many years of experience. She helps clients in long-term wealth plans. She has previously covered an extensive range of topics in her posts, including business debt consolidation and start-ups.
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