There are many who get extremely hassled by debts. You may have thousands of dollars in debts, but panicking or thinking about how you got there will not help you. What you need to do is act fast and act smartly because if you don’t this condition could aggravate and finally affect you family and your peace of mind.
The bitter truth is that most banks would want you to be forever in debt. Thus when you stop paying them the minimum that you have been all this time, they are alarmed. Most debt settlement programs will tell you to save that money and offer your creditor a lum-sum amount that will actually pay off your entire loan, even if it is much lesser than what you actually owe. While the creditors do get unsettled by the sudden ‘no-payment’ step taken you, you will have to convince them that you are unable to pay them anymore. Once in a while some creditor might decide to sue the debtor for this, but if you have a smart lawyer helping out with your debt settlement you are in safe hands.
It must be remembered that the creditor is not inclined to do the debtor any favor. The reasons why a creditor agrees to sell off the debt for a smaller amount is because of some of these reasons-
- Some of them are facing a cash crunch themselves
- The economy is bad and they want to recover their money too instead of the chance of losing it altogether
- The government gives an additional .50 cents on the dollar, in the form of a tax break.
The way a debt settlement works is by reducing the balance owed (principal) on your debt accounts through the process of negotiation on your behalf through a debt settlement professional. This is different from reducing only the interest rate as is common in debt consolidation which has no affect on the total debt balance.
Debt Settlement is actually a much faster process because it gives a person the opportunity to be totally debt free, faster. Sometimes creditors are willing to accept even up to 50% sometimes. This way the creditor gets at least a substantial part and can finally close the account rather than lose the entire amount in bankruptcy proceedings. There are many people who prefer debt settlement because for them the process of filing for bankruptcy is too stressful.
Because of this approach, money that was previously wasted on never ending minimum payments, towards interest charges now goes toward paying off the actual amount.
While the debt settlement approach is not suitable for everyone, its flexible nature makes it applicable to a wide range of financial circumstances. For individuals and families seeking an alternative to bankruptcy, there is simply no better option to get out of debt. Here are a few guidelines to help you determine whether or not debt settlement is something you should consider
Before you opt for debt settlement ask yourself these questions, if the answer to most of them are yes, you are probably ready for debt settlement-
– Are you in acute and legitimate financial hardship, unable to repay you debts?
– Do you want to avoid bankruptcy?
– Is your debt more than $10,000?
Debt Settlement allows you to be in control over the process of repayment of loan amount even while maintaining your privacy, without going public with the bankruptcy process.
There are a lot of questions that people come up with when they approach a debt settlement company-
- Will it have a negative impact of their financial score?
- What if the creditor sues you?
- Will your wages have to be surrendered?
While the credit score does take a beating it could not have been very good to start off with if you have been in debt for some time! So in the long run, settling your debt and starting off afresh is actually a wise idea. The credit score does not take into account your debt-to-income ratio, which is often by lenders to determine whether you qualify for a loan (which in itself is a bad idea, before clearing an old loan). You could actually have a high credit score because of a clean payment history and still be struggling to pay bills.
While creditors so have the legal right to sue a debtor for non-payment such lawsuits are not really common and applicable only to extreme cases. Here also with the right debt settlement firms like the Shah Peerally Law Firm, you can feel safe that if you are sued you will be well represented in court too.
Some debt collectors will tell you that your paycheck will be seized if you do not repay on time the debt. This scares many people, but you must remember that it is more a threat than anything else. Actual garnishment actions are rare and cannot not happen without advance warning. A creditor must first bring a lawsuit, get a judgment, and then obtain an authorization for the garnishment.
In reality, most creditors want to work out things amicably rather than taking a customer to court. While most creditors don’t admit it debt settlement if amicably done is better than using aggression.