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Debt Settlement |
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Debt settlement: How to get rid of debt without filing bankruptcy
If you're knee deep in debt, cannot pay your bills and wish to avoid collection calls, you may consider debt settlement (also known as debt negotiation). This is when we negotiate and reduce the outstanding debt down to 40% of the amount you owe. The creditor forgives the remaining debt thereby helping you to get out of debt faster.
At Home Solutions USA, our debt settlement program includes debt training that the client participates in that will teach the client to become financially strong again. This counseling is top notch as the client is
trained to understand how banks manipulate debtors and deceive them into staying in debt for life. Within usually 2-4 years, you can not only become debt free but also empowered to take control of debt.
What many people don't understand regarding minimum payments and high interest is that if they worked out on a financial calculator the amount of years it would take to pay off their credit card debt, they would fall backwards! Many times paying the minimum payments keeps you in debt for literally as long as you live! That is the credit card company's main goal! In America, high medical bills are one of the leading causes of bankruptcy! Let us at HomeSolutionsUSA help you!
How debt settlement (or credit card debt settlement) works
Through our alliance with EMS (Ethical Management Solutions), we offer a settlement program wherein we negotiate with your creditors/CA in order to settle the debt for less than what you owe. Given below is an example of how debt settlement or credit card debt settlement works.
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How credit card debt settlement works - An example
Let's say John owes a total debt of $50,000 on 5 credit cards. He is finding it difficult to keep up with the minimum payments. He has earlier consulted a credit counseling agency but the monthly payments they negotiated with his creditors were too high for him to pay. John doesn't want to file bankruptcy as he does not want to involve the court. So, finally John ends up working with a credit card debt settlement company XYZ. Here are the 4 steps on how John could settle credit cards and pay off his dues below.
1. Stop payment to creditors: The representative at the credit card debt settlement company asks John to stop paying creditors and deposit a certain amount monthly into a savings account (i.e. a trust account that XYZ creates for John).
2. No more handling of collection calls: While John starts falling behind on his payments, he may receive collection calls, which are effectively handled by the representative. John doesn't have to handle such harassing calls on his own.
3. Negotiation starts soon after: As John accumulates good amount of dollars into the trust account, the representative at the credit card debt settlement company starts negotiating with his creditors one by one.
4. We settle Debt for 40 cents on the dollar: Finding that John won't be able to pay enough; his creditors agree to accept a reduced amount, say around 40% of his outstanding bills. While John pays off one debt, he waits for better offers from other creditors. He makes sure that any extra money coming in would be used to pay off his bills. Finally, after a period of 2-4 years, John is able to settle credit cards debt with all his creditors.
Whether it's a credit card debt settlement program or one which includes other dues, you should stop paying your creditors initially. Instead, send in those payments to your settlement company. Otherwise, you cannot gather enough funds to settle credit cards dues and other bills. Once you have enough funds deposited into the trust account, debt settlement (or credit card debt settlement) companies negotiate with your creditors/CA and attempt to stop all collection efforts.
Debts you can settle
Credit card debt settlement is quite common. Other than unsecured credit cards, medical bills, gas/store cards, personal loans etc can also be settled. But tax debts, alimony, child support, mortgages, car loans and federally insured student loans are excluded from a settlement program.
How much to pay for settlement
Normally, we charge 15% of the debt balance that is forgiven under the program. The fees are based on:
- How much you owe in total
- The monthly training and education involved
- Legal fees
- Number of debt accounts you have
- How much you'll save by settlement
- How long it takes to settle debts
- It usually takes 2-4 years to complete a credit card settlement program or settle personal loans, medical bills and other dues. The period of completion depends upon your total debt amount.
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