When you find yourself in deep waters and are unable to manage your debts, you will frantically look for ways to get out of this fast. However, rest assured that there is no law anywhere in the world that will provide you overnight relief from your stressful conditions which you are only to blame to be in the first place.
If you go through the national debt relief review you will know about the legality aspects of each and if you visit several other sites you will know that cutting down your unsecured debts over a week is only possible in Utopian world.
Therefore, if you find yourself drowning in debt do not think that a consolidation loan or a debt settlement or even filing a bankruptcy for that matter will make you free from all your encumbrances overnight. It is therefore recommended that you approach with caution in order to make your debt ideally removed from your credit.
Legality of debt settlement option
Most people think that debt settlement is perhaps the easiest and fastest way to get rid of their debt. However, it is far from that just as the debt consolidation reviews may suggest. Here are a few facts that you ought to know before you opt for settling your debt.
- Ideally, a debt settlement company or a debt settlement attorney will negotiate with your creditors in an attempt to restructure your loan terms by either lowering the total outstanding amount or waiving some of your interests and other fees charged as penalties.
- However, it entirely depends on your creditors as to what sort of an agreement will be reached. Moreover, results are not guaranteed in this process as creditors may downright reject such a request as they are legally entitled to do so.
Add to that, even after a successful negotiation you might end up adding more to the pile of debt in the form of fees charged by the debt settlement company as well as the tax levied on the total amount you saved in this process, which is once again allowed by the law.
Legality of debt settlement companies
However, if you have to choose a debt settlement company, then remember a few points. This will make your work easy and the results more fruitful.
- Look at the services offered and choose a company that practices direct negotiations with your creditors.
- Also ask for the minimum debt required for qualifying as few debt settlement companies may not be interested to take up unsecured loans of smaller amounts.
- Inquire about the turnaround of their negotiation process. Ideally, it should be anywhere from 24 to 48 months as lower than that is not legally possible. Any company promising faster solutions should be summarily rejected.
- Typically, good and reputable debt settlement companies will not charge any consultation or cancellation fee but it will not harm you if you clarify it in the first place.
- Also ask about the service fees charged which should be ideally between 18 and 25% of total enrolled debt. However, there may be other pricing models followed. Therefore, ask.
- Know the types of debt the debt settlement company accepts. They should accept all types of unsecured debts such as credit cards, personal loans, medical bills, lines of credit, business debts, collections and repossessions, and certain student loans.
- Look for their accreditations, credentials and also go through their reviews. Accreditations from International Association of Professional Debt Arbitrators, Better Business Bureau, American Fair Credit Council and others are preferred. Choose companies that have A+ BBB and 9.4 Trust Pilot rating.
- Make sure that you do not miss out on the service limitations and the type of free resources or tools they use such as a budget planner worksheet and a debt relief calculator. Finally look at their address, customer service and accessibility over phone, email, or live chat.
If all these are satisfied then you can rest assured that you have found a legitimate debt settlement company and can safely work with them.
Compare more debt relief options
It is unwise to select a debt management option without looking for the others and weighing the pros and cons of each. As per the law, you are permitted to avail any of the available options for debt relief. Therefore, it will make a lot of sense if you consider one after going through the others as well. You may even take professional help if you are in affix in determining which the right option for you is.
You might want to look into these other options for dealing with your debts:
- Debt consolidation loans: Taking out such a loan will allow you to move all of your debts into one. According to the law, such loans come at a lower rate of interest and are often unsecured personal loans. However, you can even opt for a secured home equity loan if the conditions and your credit are favorable. This loan will make your monthly payments more manageable as it will be low in value and single in number.
- Credit counseling: This is another option you can choose when you are struggling with your debts. A government approved credit counseling agency will know all about the law and its nuances and suggest you the right steps to take. In exchange for a fee you will have a better debt management plan designed to get over your personal finance and manage your debt in a more proficient manner with a better plan of action.
- Debt management: This is one last option that is suitable for people who know how to deal with multiple bills effectively. Debt management is much similar to debt settlement but is not as extreme as it. You will find several credits counseling agencies that will negotiate with your creditors to frame a modified and easy to follow payment plan so that you can get out of your debt effectively.
Typically, a debt management plan if made in a proper manner will enable you to enjoy a low interest rate and maybe more affordable payments.