Are you looking at every possible debt settlement option?

Armen Hareyan's picture

Typically when someone enters a debt settlement program they need to fit a set of criteria that includes having at least $10,000 in bad consumer debt and a very good reason why the debt has become delinquent. Valid reasons include loss of job, lowered income, divorce, medical issues, and even limited fixed income.

These plans will usually place the customer on a fixed payment plan where the money is saved until there is enough to settle one of the bad debts. Then the debt settlement agent will move on to the next debt.

Usually the debt is settled for 40-60% of the original debt amount. These plans are a wonderful alternative for someone with no money who wants to avoid being sued. The down side is that they typically take one to three years and there are a lot of junk fees and pesky phone calls from the creditors looking for their money. Also the credit of the customer is compromised while the person is in the program.

Nothing is paid until the lump sum is ready to be sent to one account to settle the balance one at a time.

There is another alternative that some customers prefer. Sometimes we can approach each account on an individual basis and settle them in one shot. There is a little grey area here because if the customer didn’t have the money then, why does he or she have the money now.

However, in a case where the account is seriously passed due or is already a collection or a charge off we can go in and make an offer. The fee structure is a little different as well and I think much better for the customer. On a monthly payment plan typically the debt settlement company will charge 15% of the original balance plus monthly maintenance charges. When we structure a one time debt settlement we charge 20% of the amount saved.

In other words if you have a debt for $1000 and we settle it for $400, the debt settlement company saved the customer $600. 20% of $600 is a $120 fee. There is a good incentive for the debt settlement company to do a good job because it saves the customer more and the debt settlement company earns more money too. This is certainly a win-win situation.

Another feature that I like is that the customer has the right to say yes or no in accepting the settlement. In a typical debt settlement plan the company will negotiate for you and you are stuck with whatever the outcome is.

The one time debt settlement method allows the customer more control. If they are not happy with the bottom line, they can tell the negotiator “no” and void the settlement. This settlement method is finished in a fraction of the time that it takes to undergo a traditional plan. Just as long as you have the money to settle, you can settle now and avoid all those annoying phone calls from creditors as well.

Written by Preston Ware
First South Mortgage
Tel: 704-542-8057
* www.prestonware.com
Email is preston@prestonware.com.

Comments

Submitted by Sheba Trull (not verified) on
We are still far from 100% certain that debt relief is actually the right way to go however , I've been beginning to consider a lot more about it based mostly regarding what I have been reading through. I'm able to say that eleminating forty five% of my personal credit debt approximately will be a marvelous pain relief.

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