Are You Considering Debt Settlement?

Everyone knows that debt is a growing problem in the United States. Americans are finding themselves living from paycheck to paycheck more now than ever. With more than half the population of the United States in serious debt and unemployment up on the rise, more and more debt settlement companies are popping up, each promising to lower your debt and getting you debt free "fast" and "easy". The question on everyone's mind is: "Can they really help me?"

Debt settlement is a procedure where you pay off a portion of what you owe instead of the whole amount from your creditors. This involves negotiating with your creditor on a balance in hopes that you settle at a lower amount than initially owed. But what most people don't know is that if you choose the wrong people to help you, debt settlement can hurt your credit score and can negatively affect your credit history. Do your research first before you rush into getting help.

If you are one of the luckier ones and are barely in debt but still are able to make the payments, consider other options. Most, if not all, creditors will not even consider negotiating until your account is considered "delinquent". This can take up to four months, in which case, you would rack up more debt from late fees and finance charges. Once you fall behind on your payments, then the collection calls will begin. You don't have to ignore these phone calls. You can use this opportunity to start negotiating with creditors.

When creditors finally agree to negotiate, keep in mind that they are most likely having financial difficulties as well. You can use this to your advantage and offer lower amounts. If you have access to large amount of cash, either from 401k's, stocks, bonds, etc, then consider offering to pay your debt in one lump sum. If this will save you money in the long run, then this is the best time to use it. But make sure you consider this option with your accountant before you actually go through with the offer.

If you decide on getting help from a debt settlement company, make sure to compare different ones. There are lots of fraudulent companies out there trying to steal money from anyone and everyone who is desperate enough to not question anything they say. So do not go by what you see on TV, newspaper, etc. Ask around and see which ones are more popular and have proven to be more efficient. You can call different companies to see if their plans will work for you. Also, see if you can find out if there are any "hidden" fees.