Being in debt can be draining, especially of your pocketbook and energy. The constant calls from debt collectors and letters in the mail is frustrating for people living paycheck to paycheck. While there are options for settling debts, they may not appropriate for every situation, so you should know when it’s time to try debt settlement or seek another solution.
What is Debt Settlement?
It is important to know exactly what debt settlement is before you can know how to use it. When you contact a company or organization that settles debts, they will try to negotiate with your creditors about resolving your debts with them. Using debt settlement services may be the last option you have before contacting an Orlando bankruptcy attorney.
Instead of paying a debt settlement company to negotiate with creditors, there are free credit counseling services who provide the same services, but without charging for them. Along with contacting creditors to help reduce the amount of your debt or make other payment arrangements, a credit counselor may help you prepare a budget, arrange for you to take classes to avoid and stay out of debt and encourage you to close credit accounts to avoid getting deeper into debt.
When to Use Debt Settlement?
If you’ve fallen behind on loan or credit card payments and you’re being harassed by debt collectors, you should consider contacting a debt settlement service. Along with negotiating settlements for your debt, they can get debt collectors to back off while they help you reorganize your finances. However, when you contact a service for help, you need to be prepared with as much information as possible.
Research Your Debts
Make sure you gather all the information about the debts you have and try not to leave anything out. Go through all your accounts to find out how much you owe, when the last payment to them was and provide the account numbers and contact information of anyone contacting you about collecting your debts. It is important for the debt settlement service to have this information to properly assist you.
Check your credit report to make sure you have all the information on your debts. Also, check it for accuracy because you may discover incorrect information affecting your credit score. If so, you can dispute the information and get it removed from your credit report.
Keep Your Promises
Before attempting to settle your debts, a credit counseling service will help you prepare a budget. By doing so, you will know exactly how much you can afford to pay on your debts each month. When the debt settlement service negotiates repayment on your debts, do not promise to pay amounts you know you cannot afford.
Most of the time, contacting a debt settlement service is the last option before filing for bankruptcy. However, if your debt is more than you can afford to pay back, you should consult a bankruptcy attorney to find out the options for eliminating or resettling debts and getting your life back financially.
This blog post was submitted by K. Hunter Goff, Esq.
