How Debt Settlement Services Can Help You Reduce Your Debt Burden
Despite the economy showing signs of recovery, many individuals struggle to overcome the weight of debt. Fortunately, effective strategies exist that can slash consumer debt and pave the way to financial freedom. One such strategy is debt settlement, which involves lowering your debts through strategic negotiation. Here’s how it works:
A trusted debt relief company will start the process by conducting an in-depth assessment of your finances to determine the extent of your debt, your capabilities, and your goals. This assessment is vital to developing a customized debt relief plan that can deliver measurable results.
Once your provider has assessed your situation, they can begin the debt settlement process by contacting your creditors to negotiate reduced debt balances. Your debts may be lowered for pennies on the dollar, or your total debt obligations could be cut in half or more through this type of negotiation. A lower total debt amount saves money, and the reduced interest rates can also make repayment easier.
While debt settlement can be a powerful tool, it’s not for everyone. Among other things, the process can damage your credit score, and you’ll likely be required to pay taxes on any forgiven debt amounts, which can have significant tax consequences. This means that you should only consider this route if you’re in dire circumstances and don’t have any other options, such as bankruptcy.
Debt settlement can take time to reach a final agreement with your creditors, and it’s not a guaranteed solution. In some cases, your creditors may refuse to settle your debts, and you’ll be left with high late payment fees and unpaid interest that will continue to grow. Additionally, your credit score will be negatively impacted because you’ll stop paying your debts and divert those payments to your settlement account—which can remain on your report for seven years.
It can be difficult to find a reliable debt relief company, and some are outright scams. Be sure to do your research, check the CFPB’s Consumer Complaint Database, and ask whether the company you’re considering is licensed to work in your state. Additionally, look for warnings from consumer protection agencies and your state Attorney General about specific providers.
A reputable debt relief company in New Mexico should offer a free, no-obligation consultation to assess your circumstances and determine if debt settlement is the best option for you. They should also disclose any fees associated with their service, which can range from a flat fee to a percentage of the total debt enrolled in the program. Be wary of companies that charge lofty upfront fees with guaranteed results; this is often a red flag. Also, steer clear of any providers that send unsolicited robocalls; this is typically a sign that they’re not reputable.