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Advice and tips on debt settlement options

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Mark Cappel
UpdatedNov 30, 2022
How do I find step by step info on credit card debt settlement?

How do I find step by step info on credit card debt settlement, do it your self?

Debt settlement involves many facets — including personal financial discipline and budgeting (to save for the settlements), negotiations and leverage with the creditors, dealing with the potential for collection calls and maybe even fighting off a lawsuit. Generally, we suggest getting in touch with a great company to handle the situation for you... but if you want to go it alone it is a very tough fight but it can be done. We would recommend reading our Debt Settlement Advice article with free tips.

If you would like to get help from a pre-approved debt settlement company, please contact a counselor — Bills.com has several online at: Debt Help

Generally, I would make sure that any firm you choose is a member of the Better Business Bureau and get a sense for the quality of the organization (www.bbb.org )

If you want to go it alone, the first goal will be to budget. Start out with the attached Personal Finance and Budget Guide (which I have attached for you for free). It has some excellent tips on how to manage your money and get out of debt and into a virtuous cycle of wealth.

Once you start saving up money, you will need to explore the settlement portion. Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run for around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money.

Also, most credit card companies will not settle with debtors until the account is around six months delinquent. This means that you must stop paying your creditors each month in order for the settlement company to obtain a settlement. No credit card company will allow a cardholder to keep an account open after not paying for six months. Nor will a card company allow a user to continue using an account after agreeing to accept a settlement amount to pay off the account's balance. So be sure to close your accounts.

Be aware that an account showing as "settled as agreed" will likely have a negative impact on your credit score. However, you must keep in mind that a "settled as agreed" account will negatively influence your credit score less than an unpaid account with an outstanding balance. Therefore, if you do not have enough cash to pay off your delinquent accounts in full, it will still benefit you to settle with your creditors.

We hope that this helped you to Find, Learn, and Save!

Best,

Bill

www.bills.com

Debt statistics

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2022 was $16.15 trillion. Auto loan debt was $1.50 trillion and credit card was $0.89 trillion.

According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1.739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in Wyoming, 24% have any kind of debt in collections and the median debt in collections is $2680. Medical debt is common and 17% have that in collections. The median medical debt in collections is $1515.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.

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