A debt settlement plan is basically a consolidation plan that will help the person who is having problems with a loan to obtain leeway on portions of the unsecured debts she or he owes.
Some people find themselves unable to afford to pay back regular monthly payments. In this case, they may find relief in bad credit settlements, which allows them to negotiate their debts.
It is possible to have your total balance forgiven by loaning companies with the use of a third-party debt settlement agency’s services.
Those who are having difficulty with repayments will be placed on a new payment plan which will be calculated on the amount they owe and the length of the estimated time frame, which is approximately two to three years.
This new monthly payment plan will be calculated taking into consideration the person’s monthly requirements as far as household management is concerned, to make sure they can safely afford the repayment plan.
With settlement plans, you will not be paying your creditors on a monthly basis but paying these directly to a settlement agency, which holds the funds in a trust account in order to build up a good amount that they will offer as a term of settlement to your creditor.
Debt settlements are not good for everyone, it will only help those who really cannot afford to pay their monthly repayments and have fallen behind badly.
So, before filing for bankruptcy, think about settlements as an alternative means to settle debts. Bankruptcy stays on your credit for ten years while settlement plans only remain negative for seven years.
If your repayments are only a few months behind it is worth seeking a debt consolidation plan to eliminate debt, this will allow you to maintain a positive credit.
This kind of settlement plan is beneficial only for those who are behind payments for more than five months and are considering bankruptcy.
Not all types of consolidation plans can qualify for a settlement plan, the most common being medical debts, credit cards, and other personal loans can be settled.
Mortgages, secured loans, and car loans cannot be settled because all things a creditor can acquire as collateral are not taken into account.
Your best solution for a settlement plan is to seek the advice of a professional in this domain who can help you work out how a settlement plan can help your individual debt problem and needs as well as long term credit plans.
Certified credit counselors can provide free financial analysis and budget counseling sessions as well as consolidation quotes for those seeking advice without having to be committed.
You can find these companies on the Internet although you will have to verify their credibility through reviews and testimonials as there are many companies that can be scams.
