Sick of getting harassed by collection agencies? Has your debt load become too much for you to handle on your own? Then you should consider speaking with a debt settlement professional. A debt settlement is a debt relief option many Canadians use to help reduce and clear their debts.
Debt settlement is a specific type of service with the goal of helping consumers reduce their debt. Representatives of a debt settlement company will negotiate with your creditors and lenders to come up with a settlement that works for all parties involved. If your creditors agree to the settlement, you’ll have to provide a lump sum of cash to your debt settlement company who will then pay and settle the debts with your creditors.
These companies often charge a fee for their services, which is typically a percentage of the amount that you saved on your settled debt. Do note, that if your debt settlement company fails to make a deal with your creditor, you’ll still have to pay a fee.
Learn how to qualify for a debt settlement.
When you work with a debt settlement company, you’ll have a debt settlement representative who will negotiate on your behalf with your creditors. Their goal is to try and reduce your overall debt amount to a level that’s much easier for you to pay off.
During the negotiating process, you may be asked to stop all payments to your creditors until a settlement has been reached. This is a common tactic used by debt settlement companies to pressure creditors into accepting the debt settlement offer. However, there is no guarantee that an agreement will be arrived at.
If the creditors agree to the amount that your debt settlement company is requesting, you will make a lump sum payment to your debt settlement company who will then pay off your creditors.
Throughout the negotiating process, you may be required to make regular deposits into an account administered by the debt settlement company but still under your control. This account is essentially used for you to save money that will be put toward the lump sum payment to your creditors. When your creditors have been paid, your debt will be considered settled. Be sure to ask your debt settlement company these questions before working with them.
It’s important to understand that while debt settlement can help you finally rid the burden of your debt, there are some inherent risks associated with it as well. You’d be well-advised to weigh the pros and cons of debt settlement before taking this route.
Like any other type of program that is designed to help you get out of debt, there are some considerations to make first. While debt settlement can certainly be helpful, it’s not necessarily for everyone.
Here are some situations when debt settlement may be a potentially good idea for you.
When you settle a debt, you’ll get a remark on your credit report that says you had your debt settled, which will stay for seven years. While this may seem like a long time a debt settlement can help minimize the negative impact you can have on your credit when you default on your loan. Instead of defaulting, a debt settlement will help you settle your debt which will:
Of course, you’re always free to get in touch with your creditors to try and negotiate with them on your own. They may be open and willing to have a discussion with you to work something out, especially if you are able to show that you are doing everything you can to make good on your bill payments.
But sometimes it helps to have a professional do the negotiating for you. If you’re a master of negotiating, you may be successful on your own. But if you’re not, having someone else tackle the situation for you may be more helpful, especially if you enlist the help of a party that is experienced with these types of negotiations.
Learn how to better manage your high-interest debt.
Keep in mind that if you do decide to hire a debt settlement company to handle your debt settlement for you, it’s imperative that you choose a firm that is reputable and reliable. Some agencies may deal with your offer to settle informally, which often doesn’t work.
Others may charge exorbitant fees that are completely unnecessary or may require fees to be paid upfront. Fees should only be charged after a settlement is reached. But unfortunately, some debt settlement companies are out there only to make as much money as possible.
Some debt settlement companies will lure consumers into engaging in a “government program,” which can be a misleading way to get you to pay them for a consumer proposal, which you should never have to pay for.
The take-home point here is to ensure that you are working with a reputable debt settlement agency before enlisting one to represent you during negotiations with your creditors.
If your debt has gotten to the point where you’re no longer able to deal with it effectively, it may be time to reach out for help. Debt settlement may be one avenue to take, but there are a number of other options as well. Loans Canada can help determine which type of program may be best suited for you and help you alleviate your debt problems.
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