How does debit settle work?
Have you ever asked yourself what is debt settlement and how does it work? Debit settlement is the process of negotiating with your creditors, asking them to accept less than what you owe on your account. Companies that do this process do it with the understanding that you will pay them if they are able to reduce or remove your debt.
How long those it take? This depends on your budget but in most cases, it can take 3 to 4 years to finish. The reason is debt management companies ask you to stop paying on the accounts and then you start saving that money for when it is time to try to settle your debt. Once you have saved enough money then the debt management company will reach out to the creditors and offer to make a lump sum payment for less than the amount that is owed as an alternative to getting no payment at all. Most debt management companies will charge a 15%-20% Fee once a negotiation is accepted.
How does debit settlement affect your credit? The biggest effect is on your credit payment history. Once you start the process your first instruction is to stop making payments to your creditors and start making payments to your savings account for the debit settlement. This will typically drop your credit score significantly. Creditors will start to add the overdue payments to your report until they place it in collections, they charge them off, or they sell the accounts to other collection agencies. Collectors will start calling you in an attempt to collect and even call your relatives or place of work. There will be added pressure for you to pay. At (CSOA) we can put a STOP to those calls, and we will let them know when you are ready to settle. We will negotiate 30% to 70% less and make sure we get a written statement that your debt will no longer be reported in your credit reports. Once the creditor accepts the settlement, typically the settlement will include the removal of the negative debit from your credit report. This will help your credit score since the negative debit is no longer reported. Then you can start to rebuild the credit score without any negative debit on the report.
A Goal without a Plan is just a Wish. Give us a call TODAY at 844-FIX-URCR or click on the following link creditservicesofamerica.com to schedule your FREE consultation and create your personalized plan to achieve your credit and debt GOALS!
*Individual results may vary. Please call for more details and to discuss your own individual situation.