Debt Settlement not Applicable to All Debt Types

Debt settlement can be effective for many types of debts but not all types. Below are some guidelines for assessing debt eligibility.

Several types of debts are simply not suitable for settlement. Government-related debts such as traffic tickets, fines, child support, student loans, IRS debt (taxes), and alimony cannot be settled. Other programs and professionals do often exist for these types of debt.

Some creditors just aren't willing to settle. Payday loans are the most common of this type. These creditors will not reduce the amount owed by one cent. Other types of debts in this category vary by creditor and by individual situation. Once a debt is found to be completely unsettle able it should be removed from the service.

Secured debts are also not eligible for settlement. Mortgages, secured loans, and car loans are examples of secured debts which cannot be settled. If the collateral is surrendered or repossesses then the balance remaining is now unsecured and often settle able.

Debt status is sometimes more important than the debt type. Newly opened credit cards (opened in past 6 months) or cards with recent large purchases or balance transfers should, in general, not be placed into this type of program. In these cases creditors often determine the enrollment as fraud and can file a lawsuit against the client.

The most important criteria for enrolling a debt into a debt settlement program has nothing to do with the debts themselves but rather with the client. Substantial hardship is the necessary criteria for enrolling in such a program. Debt settlement is an alternative to bankruptcy. Even the most eligible debt enrolled by an ineligible client could easily cause problems for the client.

Before enrolling in a debt program it is important to do an assessment of your debts as well as your financial situation. One should assess the types of each of their debts and the likelihood that they can be settled. The key criteria one should possess before enrolling into debt settlement is real hardship.

We at Debt Free Life offer tailored Debt Elimination and Credit Card Debt Consolidation Programs based on our client's needs. Take your first step towards Debt Free Life.

Debt free life helps with consumer debt through Debt Settlement and provides DAAN services to all the clients. Calculate how soon you can become Debt Free using our Debt Calculator.