Debt Settlement and Debt Consolidation

Having trouble paying your bills? Getting too much attention from creditors?

Are your accounts being turned over to debt collectors? Worried about losing your home or your car? You’re not alone. Many people face a financial crisis some time in their lives.

What are steps I can take before I have to get help?

• Develop a Budget
• Contact Your Creditors
• Manage Your Auto and Home Loans

If you are in over your head, get help sooner rather than later.

Debt consolidation services have prearranged debt repayment plans with most credit card and collection companies. Generally you are offered a lower overall monthly payment based on a lower interest rate arranged with the creditor.

One benefit of a debt consolidation repayment plan is it will stop calls from creditors as long as you make the new monthly payments.

Debt negotiation or debt settlement is the next step when you can't make the minimum payments of a debt consolidation repayment plan or haven't made payments in the past 3 months. 

The debt negotiation company gets your monthly payments and keeps it in an account. They negotiate with your creditors for a lower payoff of around 40-50% of your total amount of debt. Once the settlement is agreed, the debt negotiation company makes a one time payment to your creditors.

The debt negotiation program lowers your credit score for as long as you are in the program.

Credit Counseling

Usually credit counseling organizations are nonprofit but be aware there is no guarantee the services are free, affordable, or even legitimate. Some credit counseling organizations charge hidden fees, or urge consumers to make “voluntary” contributions, causing more debt.

Debt Management Plans

If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend a debt management plan (DMP). You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money.

KNOW YOUR SCORE!!!
Creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report.  A recent study found that almost 80 percent of credit reports contain mistakes.