Debt settlement means that a lender has agreed to take less than the total amount you owe as repayment. Often debt settlement will destroy your credit rating. However, reaching a settlement can still take years to achieve sometimes up to four years. It can also be expensive. Even if you do succeed at debt settlement, you could still owe taxes on any forgiven debt even if you’ve successfully settled. If you’re considering debt settlement in AZ, these are a few things you should know.
There are many reasons why creditors won’t settle but usually it has something to do with your income and monthly expenses. Perhaps you’ve lost your job or recently had an unexpected expense. In these situations, you probably won’t be able to afford to make your minimum payments on time. Even though you have the opportunity to negotiate a debt settlement, this doesn’t mean you should do it immediately. Instead, you should use the time you have to come up with a plan that will allow you to afford your minimum payments while also paying as much as possible to the creditor.
Once you have worked out a financial plan you should contact your creditors and tell them that debt settlement is on the table. Explain that you have done some research and found that your minimum monthly payments don’t cover your bills and that you would like to pay more but just cannot afford to do so right now. Just tell them that you would like to stop making payments to them and that you’re willing to reach a settlement agreement.
Once you have told your creditors that you’ll be willing to settle, you’ll need to prepare a plan for how you’re going to pay them. You may have to sell your car, cancel your credit cards, or cut back on other non-essential expenses. You should be prepared with a budget and list every bill you will be paying. Include any money you currently owe the creditor such as credit card debt, student loans, medical bills, or utility bills. You should also have a written plan for reaching your debt settlement agreement.
If your creditors agree to your debt settlement proposal you will need to write them a letter of debt relief asking them to accept the settlement offer. Usually this is done by certified mail. Be sure to include your bank account numbers, routing numbers, the amount owed, and your attorney’s fees. It’s best to send this letter in a legal-sized writing pad since you’ll want to include everything in writing. You may not get all your creditors to agree, but if any do you at least can breathe easy knowing that you’re going to get out of debt relief without filing for bankruptcy.
After your debt settlement is reached you will then be able to start making payments to your new lender. Your new lender will give you a loan to pay off your debts at a much lower interest rate. This will allow you to pay your debts over four years, instead of over thirty years, which would put you into debt for a total of around seven decades. With these types of payment plans, you can literally become debt free in a matter of four years. For more details on debt relief visit https://www.arizonadebtreliefhelp.com/phoenix-az/.