Financial Services » WRITING http://financialservices.hol.es Everything for Finance Category Fri, 25 Nov 2016 09:41:31 +0000 en-US hourly 1 https://wordpress.org/?v=4.0.38 Weighing The Benefits of Debt Settlement http://financialservices.hol.es/weighing-the-benefits-of-debt-settlement/ http://financialservices.hol.es/weighing-the-benefits-of-debt-settlement/#comments Thu, 11 Aug 2016 01:21:33 +0000 http://www.aengstler.info/weighing-the-benefits-of-debt-settlement/ Debt
settlement is an agreement with a creditor to accept a lower amount of
money to resolve the money owed. Debt settlement can be attempted with
the original creditor, but it is usually after the debt has been sold to
a collection agency that debt settlement comes into play. There is, of
course, no guarantee that the current creditor will settle. Larger
agencies are usually easier to settle with than smaller ones, but if
you’re in trouble it’s an option that should be looked into no matter
what. Let’s look at some of the pros and cons of debt settlement here.

The Positive Aspects of Debt Settlement

Debt
settlement can be extremely helpful to a lot of people. For starters,
you can be free of a large debt for less than the full amount owed.
Obviously, this can save you more than a small amount of money. In many
cases, the debt amount can be reduced by 40-60%. Your credit status will
be improved by no longer showing a delinquent item. In some cases,
creditors will even agree to delete negative information already
supplied to the credit bureaus. Also, debts resolved through debt
settlement are no long subject to collection calls or other collection
action.

The Negative Aspects of Debt Settlement

There
are a few negative aspects to debt settlement, but most of them should
be entirely avoidable to an informed consumer with a competent agency on
your side. Creditors do have the option of reporting the settlement to
the credit agencies as a settled debt rather than as paid in full, so
make sure you know in advance what they plan to do in that regard.
Additionally, make sure you receive the terms of the settlement IN
WRITING from the creditor. If you do not, they may sell the remainder of
the debt to a collection agency and you may not be able to prove that
the debt was legally settled. Additionally, collection agencies are
required to report any forgiven debt of more than $600 to the IRS, which
can then be counted as taxable income for you. Talk to a tax
professional about that if possible. If you have a negative net worth,
you may be able to avoid being taxed on forgiven debt.

Obviously,
there may be more pitfalls or advantages to debt settlement as regards
your specific situation. Only by speaking to a debt settlement
professional can you be made aware of these issues. A good debt
settlement company will be reputable and accredited and be staffed with
professionals who can examine your personal situation to determine what
is best for you. Most companies will be able to give you a free
consultation without any obligation to go through with doing business
with them. Try contacting a few companies if you’re not comfortable with
the first one you speak with. It’s always good to be aware of how much
they’re charging you and what you might save by going with another
agency. Once you find an agency you’re comfortable with, you may
discover that debt settlement is the right thing to do for you.

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