Debt Settlement Companies - Frequently Asked Questions From People Looking to Settle Their Debt
Will settling my debt hurt my credit score? If you are already behind on payments, or you might be shortly, your credit is already impaired because you have too much debt compared to your income.
This is known as a high debt-to-income ratio.
To be considered credit worthy again, you must drastically reduce or eliminate your debt, thereby reducing your debt-to-income ratio.
So while your credit score may take a little hit in the beginning, it will become much better soon after settling due to the reduction in debt.
Why are creditors so willing to negotiate outstanding debt? The simple answer is that creditors would rather have some of their money back than nothing.
Creditors agree to debt reduction arrangements where they feel a settlement of the debt will be in their best interest.
In most cases they come to this conclusion because the person requesting the debt negotiation appears to be a legitimate candidate for bankruptcy.
Knowing that in most bankruptcy cases they would receive nothing, they opt to take a discounted settlement on the debt rather than receive zero dollars in a bankruptcy.
How much debt do I need to have to settle my debt? I would recommend only consumers and small business in debt of at least $10,000 hire a debt settlement company for their settlement.
If you have less than $10,000 in debt and would still like to eliminate some of your debt it would be wise to contact your creditors by yourself instead of utilizing a debt settlement company.
Why are debt settlement companies better at settling debt than an individual could? Debt settlement companies are better positioned to successfully negotiate a debt settlement due to their established relationships with various creditors.
They can take all of your outstanding debt and not only eliminate a lot of it but also provide a realistic repayment plan for the rest of your debt.
What would a typical credit card company settle for? A typical credit card company would settle for 20 - 30% of your balance although results vary considerably case by case and between different creditors.
So if you have a credit card balance of $10,000, you could expect to settle for $2,000 - $3,000 on average with the help of a good debt settlement company.
This is known as a high debt-to-income ratio.
To be considered credit worthy again, you must drastically reduce or eliminate your debt, thereby reducing your debt-to-income ratio.
So while your credit score may take a little hit in the beginning, it will become much better soon after settling due to the reduction in debt.
Why are creditors so willing to negotiate outstanding debt? The simple answer is that creditors would rather have some of their money back than nothing.
Creditors agree to debt reduction arrangements where they feel a settlement of the debt will be in their best interest.
In most cases they come to this conclusion because the person requesting the debt negotiation appears to be a legitimate candidate for bankruptcy.
Knowing that in most bankruptcy cases they would receive nothing, they opt to take a discounted settlement on the debt rather than receive zero dollars in a bankruptcy.
How much debt do I need to have to settle my debt? I would recommend only consumers and small business in debt of at least $10,000 hire a debt settlement company for their settlement.
If you have less than $10,000 in debt and would still like to eliminate some of your debt it would be wise to contact your creditors by yourself instead of utilizing a debt settlement company.
Why are debt settlement companies better at settling debt than an individual could? Debt settlement companies are better positioned to successfully negotiate a debt settlement due to their established relationships with various creditors.
They can take all of your outstanding debt and not only eliminate a lot of it but also provide a realistic repayment plan for the rest of your debt.
What would a typical credit card company settle for? A typical credit card company would settle for 20 - 30% of your balance although results vary considerably case by case and between different creditors.
So if you have a credit card balance of $10,000, you could expect to settle for $2,000 - $3,000 on average with the help of a good debt settlement company.
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