Have lots of questions about debt settlement and what to watch out for? If so, it's great that you're doing the research. It's proven that those who invest the most of themselves in the process of getting out of debt trouble are the ones who achieve the most respectable results. Let's take a look at a few common areas of confusion.

What is debt settlement?
Why consider a debt settlement program?
Why should I pay old charged off debt?
Can I settle credit card debt for less myself?
What's the difference between bankruptcy & debt settlement?
How do debt settlement companies work?
When should I consider a debt settlement program?
What should I expect when doing debt settlement?
How long after debt settlement will it take for my credit to improve?
What is a judgment?
How does debt settlement affect your credit?
How are settlements taxed?
What can I do to improve my credit score?
What should I expect with the debt settlement process?
What is the statute of limitations for creditors on debt?

What is debt settlement?
On the surface, debt settlement is basically the process of negotiating with creditors to reduce the amount you owe in return for payment. However, there's a big difference between trying to negotiate a debt down yourself and following the case-proven advice of an expert in the practice. Creditors are much more likely to work with an established company that's well informed and prepared to deliver the payment results the creditor is seeking. It's always a good idea to work with a professional to make sure it's being handled correctly.

Why consider a debt settlement program?
A debt settlement program involves negotiated amounts with creditors and debt collection agencies that can reduce the amount you have to pay in order to satisfy a past financial obligation. Debt settlement programs are nothing like a debt management program where you pay the entire balance at an agreed upon rate of interest, or a bankruptcy where a judge determines how much of the balance you will have to pay and at what interest rate. With debt settlement, we negotiate a reduction in the balance and, in affect, can typically save consumers from approximately 50% to 85% off the original amount owed. A $10,000.00 obligation can become a $2500.00 settlement! The money that you don't have to pay stays in your bank account!

Why should I pay old charged off debt?
With today's tough and strict bankruptcy laws, more and more consumers are finding out the hard way, after the bankruptcy attorney has cashed your check, that they can no longer just walk into a bankruptcy court and wipe away their past debt. Because of this fact, creditors have become far more aggressive in targeting debtors for litigation, judgment, wage garnishments, and attaching bank accounts in order to get the full amount owed by the debtor.

The amount creditors are going after includes compounding interest, late fees, collection fees, attorney fees and misc. fees that can triple, or more, the amount of the original debt owed. A debt settlement company can negotiate on your behalf to pay these od debts before you wind up paying the full dollar value of the amount owed! It can save you a lot of money and a lot of frustration.

Can I settle credit card debt for less myself?
Sure, anyone can call a credit card company and try to talk down the balance to an amount that's less than what is actually owed. It's not recommended though. The credit card companies are experts at making money and collecting what's owed - all too often, they'll take advantage of do-it-yourself debt negotiation attempts and try to turn them around into profit. By working with a qualified debt settlement attorney-based solution, you'll be assured your full legal interests are being represented; you'll also be taken much more seriously by the credit card companies.

What's the difference between bankruptcy & debt settlement?
In a nutshell, bankruptcy is a process of going through court in an effort to eliminate some debts or get on a structured payment plan. The process is very complex and can often have significant side affects. Also, bankruptcy laws have been recently changed to lean more notably in favor of the lender instead of the borrower. On the other hand, debt settlement is about setting up a plan and then opening a direct dialogue with creditors owed. It's far more discreet than bankruptcy.

How do debt settlement companies work?
Established debt settlement firms have built relationships with thousands of creditors across the the United States. We harness these relationships to work on behalf of hundreds and sometimes thousands of clients every month to negotiate debt reductions through settlement strategies. Because we represent multiple debtors, our volume demands respect from creditors, much more so than when an individual calls in about a single debt currently in default.

When should I consider a debt settlement program?
Debt settlement should only be considered when you are financially ready to begin making a consistent, affordable, on time monthly payment in order to meet the repayment requirements we've negotiated on your behalf. Agreeing to a debt settlement plan and defaulting on the payments benefits no-one and accomplishes nothing.

What should I expect when doing debt settlement?
Once we have gathered all of your creditor information, we will initiate the negotiation process. You'll be presented with the results and the applicable monthly payment necessary to pay the settlement amounts at the agreed upon repayment terms. At that point a counselor will review your specific options and it will be up to you what steps occur next. Under a debt settlement repayment plan, gradually, all collection calls will stop as will all collection actions and letters. As you make your payment on time, you will begin reducing and eventually satisfying all of the debts in the debt settlement program.

How long after debt settlement will it take for my credit to improve?
Typically, you will begin to see your credit improve between 6 to 12 months after starting the debt settlement program. At some point, you will want to begin the process of moving into a credit repair service so we can assist you in starting the process of fully repairing your credit file and rebuilding your credit profile.

What is a judgment?
A judgment comes from a court decision that results in, and/or affirms, a financial obligation of a debtor. When a judgment is obtained by a creditor, they have the right to attach the assets of the debtor. These asset can include a home, a vehicle or other real property and can include garnishment of wages and attachment of bank accounts up to the amount of the judgment. Judgments are reported to credit bureaus and can impact the ability of the debtor to attain future credit, especially credit secured by real property such as a vehicle or home. A court action is nothing to take lightly, so if you have been served by a creditor, you absolutely should not ignore the summons and you should seek out legal counsel. Not showing up in court can result in a default or summary judgment on behalf of the creditor whether or not the debt/claim is legitimate.

How does debt settlement affect your credit?
In most instances, you'll actually have to stop paying on debts for a certain period of time before the creditors will be willing to reduce the amount owed, and debt settlement can have an adverse affect on your credit. But then again, if you've been having trouble paying debts already, the majority of damage to your credit has probably already occurred. Also, in some cases, by working with a professional debt settlement expert, steps can be taken to keep the affect on your credit at a minimum.

How are settlements taxed?
When a debt is negotiated down and settled for an amount that's less than originally owed, the amount saved is generally taxable as income. However, the amount forgiven can be exempt from taxation is you were considered insolvent at the time of default, which most people are during these events. You'll want to speak with a competent CPA in order to determine whether or not you are exempt from taxation on the amounts written off by a creditor.

What can I do to improve my credit score?
The best way to improve your credit score is to pay down debts incurred on time. There are lots of commonly talked about tricks and secrets to improving your score - and a few of them might actually have some positive results - but in reality, the best way to improve a credit score is to keep the amounts borrowed in a reasonable proportion to the amount available to borrow and to pay on time, every time.

What should I expect with the debt settlement process?
Well, you should first and foremost expect to work with a knowledgeable professional who can provide clear answers to the questions you have. If the debt settlement service you're working with cannot answer your questions, do you really want them trying to handle your sensitive financial situation? Secondly, it's important to be fully committed and ready to abide by the plan put in place as precisely as possible. Those who truly want to benefit from the process are the ones that have the highest rate of success.

What is the statute of limitations for creditors on debt?
Yes, written off debts have a statute of limitation that varies by state that can range from 2 to 5 years or longer depending upon the type of debt. You'll want to check your states statutes or with your account specialist to determine whether or not someone threatening to sue is within the statutory time limit.

Would you like to speak with one of our expert debt advisors today? Please give us a call at 1-877-246-3450 and we'll be happy to answer any questions you have and help you navigate the path to total debt relief.