Struggling with unmanageable debt can feel overwhelming, but you’re not alone—many Americans find themselves facing mounting credit card balances and other unsecured debts.
One potential solution is debt settlement, a process where you negotiate to pay less than the full amount you owe. Done correctly, it can be an effective way to take control of your finances and work toward a fresh start. Before you decide if debt settlement is right for you, it’s important to understand exactly how it works and what to expect along the way.
What Is Debt Settlement?
Debt settlement is a strategy in which you or a company working on your behalf negotiates with credit card issuers and other creditors to settle your debts for amounts less than what is due. The settlements are typically one-time payments.
How Does Debt Settlement Work?
If you enroll in a debt settlement program, you will cease paying your creditors. Instead, you will make deposits into a federally insured savings account in your name that you control.
As you accumulate account funds for settlements, your debt settlement company contacts your creditors on your behalf to try and negotiate lower balances.
After that, the debt relief company will fund the settlements you approve using the money in your account. You’ll typically be enrolled in the program for 12 to 48 months, depending on how long it takes you to accumulate settlement savings.
What Should I Do Before Deciding on a Debt Settlement Company?
Debt settlement can be a valuable tool for regaining control of your finances, but it’s important to choose your partner carefully. Not every company has your best interests at heart, so it’s wise to take a few key steps before making a decision:
- Check out the company’s reputation. Look up the agency’s ratings on sites such as the Better Business Bureau. Also check online testimonials on Trustpilot and elsewhere.
- Look for accreditation. You want a company that is in good standing with organizations such as the American Association for Debt Resolution.
- Make sure the company doesn’t require upfront payment. That’s prohibited by the Federal Trade Commission.
- Be certain you understand all fees. Some companies charge a percentage of the debt you enroll, while others charge a percentage of the amount they save you.
- Understand the process. Determine how long the enrollment is expected to last and when the agency is likely to begin negotiations.
- Be sure the company is transparent. The agency should provide progress updates and a support team that you can turn to for answers to questions.
In Summary
When debt becomes overwhelming and traditional repayment methods aren’t working, debt settlement may offer a practical alternative. By working with a reputable company like National Debt Relief, you could potentially reduce the amount you owe and move one step closer to becoming debt-free. Be sure to thoroughly research your options, understand the process, and select a company that prioritizes your financial well-being.
