Every person is unique, but when you face a challenge like handling settlement of your debts, you are never alone. Countless men and women have faced the exact same problem and have survived and thrived. The following guide is designed to help you navigate your journey with the best information and resources that helped other survivors when they faced the same challenge.
TSC has scoured the Internet and assembled links to the very best debt-settlement resources: Articles, blogs, forums and tools that can help you make better decisions and take action to overcome the range of physical, emotional and other challenges that you face.
As you’ll see, we always welcome your ideas and suggestions to make this Debt Settlement guide even more helpful to survivors like you.
JUST FOUND OUT
Survivors Say: The Best Resources for Debt Settlement
- FinancialWeb.com: Debt Settlement This Web site discusses the facets of debt management and settlement, from recognizing the warning signs of too much debt to negotiating with creditors.
- MSN Money: Debt Settlement - A Costly Escape This article, originally published in Smart Money, explains when debt settlement is better handled by experts or on your own.
- Bankrate.com: Make a Deal with Debt Collectors What to do about working out a deal with your creditors.
The Big Picture
Debt settlement is a perfectly legal solution for consumers drowning in unpaid bills and seeking an alternative to bankruptcy. It is one way to pay off your debt for thousands less than you owe, yet it isn't as simple as making an agreement with a debtor. Experts say only a small amount of debtors are good candidates for debt settlement. If you want to go this route, you can settle debts in one of two ways: do it yourself or have a professional debt-settlement company help you.
In the first option, you negotiate with each of your creditors that in exchange for an agreed-upon one-time payment -- typically, between
20% and 75% of what you owe -- the creditor forgives the rest of your
debt and starts reporting it to the credit bureaus as settled.
Meanwhile, you'll need to put money aside toward the settlement and
stop making payments to your creditors. On your credit reports, the
balances of settled debts will show $0, but your previous history
of delinquent payments or charge-offs will remain on your report. If you choose to go with a debt-settlement company, you'll pay dearly for their help -- some companies charge 15% to 17% of your debt amount upfront, some charge around 25% of the debt savings once you settle, along with other service fees, and others charge a flat monthly fee.
Why DIY Debt Settlement is Better Than Hiring a Settlement Company
Your Debt Settlement
There is no point in pursuing debt settlement as an option if you continue to have the same poor financial habits that got you into debt in the first place. Whether it's living beyond means or an issue with credit cards, you must get your financial house in order.
Calculator: How Much Debt is Too Much?
Make a Financial Goals Worksheet
Your World
Prepare for the immediate effects of debt settlement. You will be contacted by creditors, and your credit will take a blow.
Debt Settlement and Dealing with Creditors
Explaining Debt Settlement to Family and Friends
Trying to conceal your debt problem will often result in it getting worse as you try to maintain the illusion that everything is OK. Also, keeping it a secret from your family will usually stop you from taking the tough measures you need to resolve your debt problem. But once you're able to swallow your pride and take on the role of survivor, you can easily explain it.
Dealing with Debt - You Need to Talk to Someone
Debt Settlement Myths
- "Debt-settlement companies can have all my debt eliminated within 12 months."
- "Credit-card debt is illegal, and you need to pay legal fees to get rid of it."
- "It's not a good idea to settle debts with creditors yourself."
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