Tuesday, 27 August 2013

Getting Out of Debt Blog Series #4: Debt Settlement


With the average consumer debt load in Canada at an all-time high, it is unfortunately not surprising to see companies popping up everywhere offering solutions to your debt problems through a debt settlement. But be wary; unlike consumer proposals, bankruptcies and debt consolidations, debt settlements, depending on the company, can sometimes come with more negatives than positives. This 4th blog in our ‘getting out of debt blog series’ looks at the debt settlement, giving you the information you need to help you make the right decision about solutions to your debt problems.

What is a debt settlement? A debt settlement is just that – the settlement of your debts. This settlement involves a negotiation with your creditors to reduce the amount of the debt you are required to pay off.

A debt settlement will in almost all cases involve paying the settlement amount in a single instance. In most cases the collection agency representing your creditor can accept less money from you than you owe to settle your debt. We have seen collection agencies settle debt for as little as 50% of the amount that was owed. That being said, regardless of whether it is the collection agency or a creditor that is willing to consider a debt settlement, they will want to receive the settlement money in full.

Often consumers won’t have the money to pay the settlement in full. This has spawned an entire industry of debt reduction companies. These companies will accept monthly installments from you over time with the promise that once you have remitted enough money they will settle your debts. This is a risky proposition. Instead, do your due diligence because if you are remitting to a debt reduction company and they go out of business in the future your money may not be secured.

There are several reputable companies out there that offer financial consulting and can help you to settle debt with your creditors without risk to you. These companies, experienced with consumer debt solutions, will represent you fairly and help you establish a plan to settle your debts without you giving money to them on a monthly basis.

Avoid being taken advantage of by doing research and avoiding companies who bill themselves as debt reduction specialists or companies. Look for positive reviews from consumers and see how much of an online image they have established to ensure that you are working with a professional organization that has staying power.

How will a debt settlement affect your credit? As with any debt solution, a debt settlement is recorded on your credit report and may bring down your score. That being said, if you are considering debt settlement the impact on your credit rating is likely no worse than the damage already done. Once you have settled your past bad debt you can begin the process of rebuilding.

If you are considering a debt settlement as a way of getting rid of your debt, there are a number of things to consider, but the most important is the company itself. Just because a company promises to settle your debts it doesn’t mean that they will do so the right way. Make sure that you do your research and make inquiries. Working with a trustworthy debt settlement company will make all the difference, keeping you protected throughout the process.

If you need help getting out of debt or would like to find out more about your debt settlement options, please contact DebtCare Canada today by calling 1-800-890-0888.

9 comments:

  1. Getting out of debt is really hard and you can't really say that debt settlement will totally get you out of your debt. It is great that there are a lot of companies like NDR that are always there to help. You can check out their Facebook page to learn more about their services.

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  2. I have been following these blog posts to help me decide on debt settlement. The National Debt Relief could also give you some advice.

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  3. I've seen people deciding on bankruptcy just because they cannot manage their debt properly. They think that it is the only way, or the best way to get out of the debts. But now there are great options and debt settlement is one great option. The one time settlement will really take off the debt burden of a person instantly. But this has to be taken only when you have asset, other than income to do this one time settlement. If you don't have such an option then you must try for debt consolidation.

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  4. Getting out of debt is really hard and you can't really say that debt settlement will totally get you out of your debt but in most of the cases it will. just try any good Debt settlement company

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  7. Thanks sir for your valuable post. I got more help from Idealds for debt statement.

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