Debt Settlement – Frequently Asked Questions
There are many questions about debt settlement that you may need to know. Here are the most popular questions to get you started, along with their answers.
1.What exactly is debt settlement?
Debt settlement is a process whereby a credit specialist will go to your lenders to negotiate a settlement for your loans. He will try to work out the best settlement that he can for you. He is an independent agent, working on your behalf.
2.How much will I have to pay?
You are usually charged between ten to fifteen percent of your total debt amount. This is very costly and you may end up having to pay that amount right away, or on a payment plan.
3.How much of a settlement can I expect?
It all depends. Sometimes the debt specialist can arrange a settlement that is up to half of what the original debt was. It depends on the lenders and how much they are willing to offer. It also depends on how they view your own personal financial situation. They will look at how likely it is for you to pay back any money without a settlement, and how much.
4.Will it lower my credit rating?
Yes. Taking out a debt settlement will definitely lower your credit rating. It will not, however, be as destructive as declaring bankruptcy. In time you will be able to build your credit rating back up if you stay in a better financial situation.
5.Can I trust a settlement agency?
In most cases yes. There are shady companies out there however, and it is always in your best interests to call the Better Business Bureau and see if they are listed, and how good their report is. You can lose a lot of money if you do not follow due diligence.
6.Are the records of my settlement kept private or public?
All of your records will be kept private, whereas with bankruptcy Chapter 13 they are kept public.
These are some of the more common questions about debt settlement that you need to know. If you need more information, you can contact a qualified debt specialist in your local area. Remember to withhold any personal information until you have properly checked them out. There are scams out there, and they can take your personal information and use it against you. Finding a legitimate agency takes only a few extra minutes of your time.
