Consumer Credit Advocates
Online Consumer Credit Advocates can help you eliminate bills and be debt free faster than counseling and much easier than bankruptcy. Review all the facts about debt settlement and decide if you want do-it-yourself free debt negotiation or to hire an agency.
First of all, what is debt settlement? Debt settlement is a method of getting out of debt by negotiating a reduction of the amount owed to creditors.
Next you need to decide if debt settlement is the best option for you, or if you should choose credit counseling or file bankruptcy. Review our article about credit counseling versus debt settlement, and read the highlight FAQs about debt settlement below.
Will debt settlement hurt my credit? The main purpose of debt settlement is to get out of debt fast and at a substantial reduction. It's main objective is not to improve credit scores. If you partake in a debt settlement program, it is likely that your credit will get worse initially and then may improve over time, much like the affects of filing bankruptcy. But, if you already have bad credit, the affect may be minor, if at all.
How long does it take to complete a debt settlement? This can also vary, mainly whether you do-it-yourself or if you hire a more experienced negotiator who; may not only be faster, but who may also have more skills to get you a larger settlement.
Some of the time factors include: total amount of debt, number of creditors owed and availability of funds to be used for settlements. If; for example, your debt is $20,000 on one credit card account and you and your creditor agree to a settlement payoff of $7,000, you could complete the process in just a matter of days (if you have the $7,000 available to send immediately).
Will the IRS tax the settled amount? Possibly, because creditors are required to report forgiven debt over $600 to the Internal Revenue Service. The consumer is also required to report the same amount of forgiven debt as income on their tax return. You should receive a form 1099-C from the creditors that have forgiven over $600.00 of your debt at the end of the tax year. You may be able to write off the income from forgiven debts or you may be required to pay taxes on the income amount.
What's the first thing a debt settlement company will do for me? Most debt settlement companies will conduct a free budget analysis to determine whether or not debt settlement is the best route for you.
What kind of debt can I settle for less? Most debt settlement companies only take unsecured debt, such as credit card debt, personal loans, medical bills, maybe utility bills, etc. Most debt settlement companies do not handle secured debts like car loans and mortgages, nor debts for child support, alimony and taxes.
Once you've decided debt settlement is right for you, the next decision to make is if you want to negotiate settlements with creditors yourself or if you'd rather pass that hassle on to a debt settlement company. To help you decide, first review our free debt settlement steps and tips, as well as download our sample debt settlement letter. Here's another creditor debt settlement letter example.
Here are more tips and advice to assist you:
 Share this Financial Article with a Friend - click here
Webmasters: Free Financial Content for Your Website!
Multiple ways to use our financial content:
1) You can use our RSS Feeds for automatic insertion and updates
2) You can simply link to this article
3) You can copy/paste the HTML code below (do not remove any links).
|
Personal loan and credit card resource serving millions of good and bad credit U.S. consumers.