As a consumer, you have reviewed all the various options for getting yourself out of your recent financial situation. In some cases, this financial situation maybe only temporary since it has been caused by the current economic conditions in which you may have lose your job or had an medical emergency. However, since you are unable to maintain your normal level of payments on your credit cards and have made the decision to get up with your mortgage payments. You are seeking some type of financial relief. The solution to this situation is a debt settlement program.
Before entering into any program, the consumer needs to understand how the program works and its affect on them. Debt settlement may not work for everyone. It is not a quick fix or overnight miracle for the consumer. So if anyone tells you they can wipe way your debt instantly or in less than one month. You need to seek out another company, since the process can take between 12 months to 48 months.
When you sign up with a debt settlement company, the consumer should ask the following questions:
- How long has they been in business
- Is the staff trained and certified
- What are the exact fees for this service
- What is the name of the bank and officer responsible for the trust account
- Are they listed with the Better Business Bureau
- Who will exactly be handling my account
- Ask for a contact list for the company
A legitimate business should able and willing to answer any questions you might have about their services. Also how your account will be handled on either a day to day bases or monthly bases once you have established the parameters.
As a consumer, you need to also know the drawbacks of a debt settlement program. However, these drawbacks are less serious than filing bankruptcy or doing nothing about your situation:
- Credit Score may be hurt – but your score has already dropped because of late payments or non-payments. You score will improve as your payoff the debt.
- Tax ramifications – The IRS requires you to report as taxable income any amount of debt settlement in exceed of $600. This means an increase to your income.
- Collections – The consumer may continue to receive calls from the lenders until they are informed you are using a debt settlement program. However the call may continue since it up to the individual lenders.
- Fraud – As a consumer you might select the wrong debt settlement company.
The key to a successful resolution to your financial situation is to understand the progress and know the debt settlement company you are working with.
Again, this is no easy progress, but with determination and a willingness to solve the problem. A debt settlement program can and will work for you and your family.
