The Best Plan to Clear all your Credit Card Debts
Are you getting deeper in credit card debt? Wondering how you’re ever going to clear out your outstanding debts? Relax! Here are a few tips to consider how you can get out of your debt safely without losing much on interest.
Debt Settlement Companies
The best way to settle down your longstanding debts is approaching the right debt consolidation financial services firm that can help you to negotiate with your creditors for faster & easy debt settlement. Resolving your debts this way involves paying a lump sum that's less than the full amount you owe. This is typically used for smaller accounts. For larger accounts, a qualified company will set you up on a instalment agreement to pay back a reduced amount. For example, if your balance is $10,000 on one account. The firm will assist with reducing this down around 40% to 50%. Once they have reduced the balance to $4,000 to $5,000, they will then set you up on a payment plan to pay back the reduced amount. Setting aside a specific amount every month from your savings will be used to pay each of your creditors.
Debt settlement companies collect this amount every month to grow enough savings for a one-time settlement or to pay back the creditors with an installment agreement. In this process, the clients will stop making any further monthly payments to their creditors and instead will use their savings account to make payments for their accounts.
Risks in Debt Settlement
Debt settlement is definitely a good choice, but, there is more to learn before getting into that. You can learn about the process & risks involved in debt settlement through this article.
Most of these programs demand money deposit in a special savings account for 36 months or more before all your debts are settled. Many people find it easier making these payments as the payments are typically much less than the minimum payments required by the creditors.
A debt settlement company may not be able to settle all of your debts depending on which creditors you have. Some creditors such as pay day loan companies or Federal creditors are not accounts most companies can help with. A reputable financial services firm will tell you this before enrolling you into a program to ensure you only add accounts they have a successful history with.
Debt settlement programs often ask you to stop making payments directly to your creditors. This can harm your credit report along with other consequences. However, if your credit score is already being impacted by your utilization being to high, this can help your credit score rebuild faster as it pays your balances off quicker and reduces your utilization down to zero. Utilization is 30% of your FICO score so it’s important to keep that under 30%. You may also get calls from your debt collectors requesting for repayment. However, once they are aware you are working with a reputable firm, they are less likely to bother you and will contact the firm instead
Beware of Debt Settlement Scams
Debt settlement programs offered by companies can be deceptive and might fail to deliver the promises they make.
For example, few companies may try to collect their fees even before they have settled any of your debts. The Federal Trade Commission requires debt settlement companies to get the work done first and not accept upfront fees. If a firm is collecting upfront fees, they may be violating federal law.
It is always best advised to avoid doing business with companies that:
Charges fees before they settle your debts.
Says there’s a new government program to clear out your personal credit card debts.
Guarantees to clear out your unsecured debt & can stop all debt collection calls and lawsuits
Never explains to you the consequences of either communicating or not communicating with your creditors.
Researching Debt Settlement Companies
Before you approach a debt consolidation firm, you must know that you will be spending a lot of your money to clear out your debt. For better guidance on this, you may approach your state Attorney General and Local Consumer Protection Agency to inform you, if any consumer complaints are on file about the firm you’re considering. Also, you can check if the company is licensed to work in your state.
Before you sign up for any service, make sure the debt relief company gives you the needed information about the program.
The company must be open about its fees and any conditions on its services.
It must explain the duration needed to get results.
You must be informed on how much to save before they can make an offer to each creditor on your behalf.
Must explain you to how this can impact your credit score
If you decide to settle your debts through a debt consolidation company, you may have to put your money in a dedicated bank account administered by a third party individual. However, you will have all the rights to your funds. The account administrator may charge you a low fee for your account maintenance and will be responsible for fund transfer from your account to creditors and the debt settlement company when agreements occur..
Gold West Financial is a debt consolidation financial services firm located in California and offering its personal loans & debt consolidation services in the US. With Gold West Financial, ensure risk-free debt consolidation at low-interest rates and flexible repayment options. Our experts will drive you through all the procedures & risks involved in debt consolidation. We maintain high transparency in every detail with our clients. With low monthly payments and zero pre-payment penalties, our clients are saving lot of money in interest and getting out of debt faster. If you are looking for the best debt consolidation company that can help you to clear out your debts, then Gold West Financial is the right choice for you.