There are few things more burdensome than a ginormous debt load. The good news is, you have options, including a strategy called debt settlement. That’s where you get your creditors to clear your debts for a percentage of what you owe. Here’s more about the benefits of debt settlement.
What is Debt Settlement?
Also called debt relief, debt settlement involves hiring a company to persuade each of your creditors to accept a one-time payment in exchange for a portion of your debt being forgiven.
How Debt Settlement Works
If you believe that debt settlement is a good fit for you, you’ll need to take these steps:
Find the right debt settlement company. Unfortunately, the industry is pockmarked with bad actors. So, it’s important to choose a reputable. trustworthy company that has a long track record of helping its clients gain a fresh start. Nationally, Freedom Debt Relief is the leader.
Educate yourself. You want to learn upfront how much the service will cost, how long before your debts are settled, and what you’re risking. If the company you’re eyeing isn’t forthcoming with any of this, you may be dealing with a scam.
Start saving for settlement. Rather than paying your creditors directly, the settlement company will ask you to deposit funds into an escrow-like account that will ultimately be used for your settlements. Once you’ve accumulated sufficient funds, the company will begin negotiations with your creditors in earnest.
Take the offer. No creditor wants to accept a penny less than what’s owed. However, most would rather settle than get nothing, which is what they’ll get if you file bankruptcy — your other alternative. The settlement company will see what it can negotiate on your behalf.
Pay your creditors. Once you’ve approved each creditor’s offer, you’ll pay the settled amount all at once from your escrow account.
Pay the company. The last thing you need to do is pay the settlement company, which usually charges between 15% and 25% of the settled debt.
Kinds of Eligible Debts
It depends on the company, but the most popular kind of settled debt is that which is unsecured, meaning there’s no collateral attached. Common types of unsecured debt include credit cards, medical bills, personal loans, store cards, gym memberships, and other unsecured lines of credit.
The Benefits of Debt Settlement
It’s true that the process of debt settlement can temporarily hurt your credit score, which at this point has likely seen better days. However, the benefits of debt settlement, and the opportunity for a fresh start, outweigh any risks.
1 : biography of saints or venerated persons
2 : idealizing or idolizing biography
Did You Know?
Like biography and autograph, the word hagiography has to do with the written word. The combining form -graphy comes from Greek graphein, meaning "to write." Hagio- comes from a Greek word that means "saintly" or "holy." This origin is seen in Hagiographa, the Greek designation of the Ketuvim, the third part of the Jewish Scriptures. English's hagiography, though it can refer to biography of actual saints, is these days more often applied to biography that treats ordinary human subjects as if they were saints.