Is Debt Settlement Affordable?
Estimates for U.S. consumer debt come in at more than 13 trillion dollars, which includes debt from credit cards, student loans, mortgages, and auto loans. On average, each American household carries nearly $8,400 in credit debt. For some people, this amount of debt becomes too challenging to manage, leading them to look for assistance, sometimes in the form of debt relief. If you fall into this category, you may be wondering, is debt settlement right for me, and is debt settlement affordable? Let’s take a look.
What is Debt Settlement?
Debt settlement, otherwise known as debt arbitration or debt negotiation, is an agreement made with creditors. It allows you to pay an amount, usually less than what you owe, to settle a debt.
Typically, people can settle their debts for about half of what they owe. It’s important to know that debt settlement only pertains to unsecured debts like credit card debt and personal loans, not to mortgages or car loans, which are both secured.
The goal of debt settlement is to reduce overall debt balances rather than just reducing the interest rate or payments to creditors. Debt settlement can be a viable alternative if your accounts are in collections or if you’re falling behind due to a legitimate financial hardship.
Although creditors have no legal obligation to negotiate any outstanding debts, many usually do because it allows them to recover more money than if they were to wait for regularly scheduled payments. If they can settle existing debts, it may be better for them than to write off more bad debt as uncollectible.
Is Debt Settlement Affordable for Me?
Debt settlement is commonly referred to as the most affordable debt relief option available. The best candidates for debt settlement are those who have an overwhelming debt that they cannot pay on their own. This is often more affordable than juggling multiple monthly payments.
In this program, due to your financial hardship, you are making payments into a dedicated savings account instead of to the creditors. Over time, negotiators will contact the creditors when they feel that you have enough savings available to make a reduced balance offer. A good settlement company will keep clients updated at all times and work with their clients to negotiate the best possible settlement available.
What are the Benefits of Debt Settlement?
Debt settlement can help people get out of debt faster because the negotiated amount is typically less than what they originally owed, allowing them to pay it more quickly. When you enter a debt settlement program, you should understand that there is no promise that your credit will improve. But, once you are out of debt with the help of a debt settlement program, you can begin to reestablish and improve your credit score over time. Debt settlement can also help you to avoid bankruptcy, which stays on your credit report for ten years.
Are You Struggling with Debt?
If you are struggling with debt and are looking for help, turn to UmbrellaDEBT Relief. We can help you become financially independent and live a healthier financial lifestyle. Call UmbrellaDEBT Relief today to find out about the programs we offer and how they can help you achieve financial freedom!