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4 Tips On Debt Settlement

2 Mins read

Debt settlement makes it easy for you to get out of debt without having to pay the full amount. Creditors are willing to settle your debt at a lesser amount when they believe that you will file for bankruptcy instead of paying back. The reason they agree to the debt settlement proposal is to get back as much money as possible. The following are four helpful tips on debt settlement.

4 Tips On Debt Settlement

1. Seek Help Immediately if You Can’t Pay Your Debt

When you don’t pay your bill on time, the creditor will report your account as unpaid to the credit bureaus and put a negative record on your credit report. You must keep in mind that your financial institution can send your account to the collection and file a lawsuit. It is far better for your credit report to state that your debt is “settled” rather than marking your account as “delinquent”. Creditors are usually open to negotiation when your account is not being charged off. Your account will become charged off when you are late on payment for more than 6 months.

2. Proof of Financial Hardship

Most debt settlement services will demand that you provide proof of financial hardship. To prove your financial hardship, you must gather all your financial records to show that you are incapable for paying your debt.

3. Make Sure Your Settlement is Reported to the Credit Bureau

You have to make sure that your settlement will be reported to the credit bureau. If they are not reporting your settlement, your account will remain in a delinquent state on your credit report. This will not be good if you want to apply for loan in the future. Making sure the settlement is reported correctly will put an end to all the debt collection calls. The settled account will be marked on your credit report. Whenever creditors look at your credit report, they will know that you have borrowed more money that you can’t afford to pay back in the past. This is something for you to consider.

4. Stay Away from Company that Makes Big Promises

A word of caution is to stay away from companies that makes big promises. Debt settlement does not guarantee that you will get out of your debt. It takes time and effort as you will have to pay back the bill every month until all the debts are fully settled. The debt settlement company you hire should have a customer service guarantee in place. They should return customers’ phone calls and emails quickly.

Conclusion

In conclusion, you should immediately seek help by signing up for a debt settlement if you know you don’t have the ability to pay back your debt. It is important to take action to settle your debt instead of not doing anything.

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