Understanding Debt Settlement
People who find themselves under a mountain of debt often feel as if there’s no hope for a brighter, more prosperous future in which they’re not constantly racking up late fees, being harassed by creditors and feeling as though they just can’t catch up. Fortunately, a number of options exist to help people pay off the money they owe; debt settlement is just one of these many options.
What Is Debt Settlement and How Does it Work?
Simply put, debt settlement is a contractual agreement between you and your creditors in which you agree to pay a lower monthly amount than what you actually owe on unsecured debt, mainly credit cards. Unfortunately, this option is not available for types of secured debt where the property can be foreclosed upon or repossessed, such as a house, car, boat, etc.
There are three main ways you can approach settling your debt, each of which comes with its own unique list of pros and cons. You can: 1) negotiate a settlement yourself, 2) hire a debt settlement lawyer or 3) work with a debt settlement company.
Potential Risks of Debt Settlement
While debt settlement makes payments more affordable and can be an effective means of paying off debt for many people, it’s important to understand that it isn’t a perfect system and that there are a number of risks involved. This is especially true if you choose to work with a debt settlement company because these entities:
- Often lack the legal expertise necessary to successfully negotiate on your behalf.
- Typically encourage you to stop sending payments to your creditors, which can have serious adverse effects on your credit score.
- Generally attempt to negotiate small debts first, which means your larger debts will continue to accrue interest and fees.
- Often require you to deposit money into a dedicated account for up to 36 months, sometimes even longer, before your debts will officially be settled. If you’re unsure if you’ll be able to make these payments for the full duration of the program, you may be better off choosing a different debt relief option.
Find Out if Debt Settlement Is Right for You
As mentioned earlier, debt settlement is just one of the many ways you can tackle your debt. Viable alternatives do exist, including talking with your credit card company about setting up a debt management plan, seeking advice from a reputable credit counseling organization or filing for bankruptcy.
At Havner Law Firm we understand how difficult and overwhelming financial hardships can be, which is why we’ve been steadfast in our commitment to helping residents throughout Arkansas find the debt relief solutions they need for more than 25 years.
To find out which of our many debt relief services are right for you, contact us today for a free initial consultation. We’d be honored to assist you in finding the help you need to let go of your debt and move on with your life.