If you're struggling to meet repayments to creditors and you're researching ways to get out of debt, you may have heard of a debt settlement agreement, an informal arrangement you can reach with credit card companies and other lenders to settle your debts. Here, we examine debt settlement in-depth, including what it is, how it works, the benefits of a debt settlement program, and what happens to your remaining balance after the debt settlement process is complete.
A Debt Settlement is an informal arrangement to reduce unsecured debts over $10,000 by as much as 70%. Also known as debt negotiation or a debt settlement agreement, this plan offers the opportunity to pay a one-time lump sum payment to settle all debts.
They say time is money and the true can be said when you’re handling debt. Debt Settlement programs can save time and stress as trained credit counselling deal with creditors on your behalf. Your dedicated advisor will draw upon their knowledge and experiences to negotiate a reduced payment to creditors – writing off a proportion of your debt.
A Debt Settlement can be a way to reduce your interest charges by consolidating debts into one payment and can help you regain control of your finances and reduce the daily stresses caused by debt.
The process of arranging a Debt Settlement is straightforward. If you find yourself in circumstances that could prevent you from paying your debts in full, creditors may be open to negotiating a repayment amount that is less than the full level of debt.
A Debt Settlement can reduce debt by up to 70%, however, this is dependent upon your current financial situation and varies for everyone.
An experienced and licensed credit counsellor will build your financial profile before approaching creditors to establish a Debt Settlement – ensuring they create a plan this matches your affordability.
Your advisor will negotiate with the creditors to secure a one-off lump sum payment to clear your unsecured debts.
A debt settlement company is a financial institution that specializes in setting up and managing debt solutions like debt settlement agreements and consumer proposals.
Because a debt settlement agreement is an informal debt solution, it’s possible for you to arrange one on your own. You could approach your credit card company with an offer of a lump sum payment, for example, and they may accept your offer.
On the other hand, debt settlement companies are experienced in negotiating settlements with creditors, which is why lots of people prefer to use an independent third party in the debt settlement industry , even if many companies charge a fee for their services.
To be eligible for Debt Settlement you must be able to demonstrate that you are able to accumulate savings and income which will be able to cover the payment agreed upon with creditors within three years.
A range of unsecured debts can be included in a Debt Settlement. This is can include but isn’t exclusive to:
Secured debts can’t usually be included in a debt settlement agreement. If you have a mortgage taken out against your home, for example, you should continue making your monthly payments alongside the fee you negotiate with your creditors.
Settle your debt with a one-off lump-sum payment agreed between your creditors and licensed debt management expert.
Handling debt can be an isolating experience, often feeling like you have nowhere to turn to share your financial concerns as creditors seek their repayments. A Debt Settlement plan can take the pressure off debt management as an expert negotiates with creditors to secure a one payment to clear your debts.
Opting for a Debt Settlement plan can reduce debts by up to 70%. Experienced advisors utilise their negotiating skills and knowledge of previous cases to secure the best possible outcome for each individual client.
A Debt Settlement is based firmly on your affordability and current financial circumstances.
There is an expectation that Debt Settlement plans will be complete within three years.
You will be debt free once your Debt Settlement plan ends, offering the chance for a fresh start and brighter financial future, although your debt may continue to have a negative impact on your credit rating after your debt has been settled.
Debt Settlement offers a range of benefits and could be the right debt solution for you if:
If you want to know how debt settlement works, or are interested in exploring other debt relief options, talk to A. Fisher & Associates
We can give you the financial advice you need to settle your debts and get back on track financially.
For impartial debt advice and more information on the options available to you, talk to one of our friendly advisors today on 416-842-0040.