Is Debt Settlement Right for Me?

If you find a Debt Management Plan (DMP) does not fit your budget and you do not want to file bankruptcy or do not qualify, Debt Settlement may be the best option.

Debt Settlement usually offers a lower monthly payment than a DMP and works towards negotiating with a creditor to accept a lesser amount than what is owed as opposed to only lowering interest rates.

The amount of time required for Debt Settlement varies based on your payment amount and what the creditors may be willing to accept.

 

This is not a quick fix but instead requires a commitment of three to five years, patience, and faith.

Benefits

  • Lower monthly payment
  • Reduce overall amount of debt
  • Potential to get out of debt sooner
  • Access to an attorney if a creditor pursues litigation

Challenges

  • Increased collection activity including collection calls, and letters
  • Possibility of being sued, wage garnishment, and legal action.

How Debt Settlement Works

Debt settlement plans are designed to negotiate with creditors to accept a lesser amount that what is truly owed on the account. For settlements to be considered the accounts must become delinquent, this may increase creditor collection activity. Creditors are not willing to accept a lower amount when the accounts are current because they are receiving full payment. Why accept less when you are getting the full amount?

CareOne’s process differs from several competitors because they complete a detailed budget analysis to identify any potential areas you can make spending adjustments. The fee structure is also set up differently from our competitors. Many competitors require full payment up front before they begin to work on a customer’s account.

CareOne collects a one time activation fee, a monthly service fee, and then collects contingency or success fees based on the amount saved when a settlement is completed.

Your monthly payment is deposited into an escrow account and as the account builds value settlement offers will be issued to your creditors. Most creditors accept settlements, it just becomes a question of how much and when. The quicker your escrow account builds value, the sooner your negotiator may be able to set up settlements with your creditors. The important thing to remember is that this type of plan takes time. Someone must be entirely committed to the plan and be willing to stick it out.

Debt Settlement is not the Easy Way Out

Debt Settlement of any kind is never easy and in fact can be very stressful and aggravating. Creditors and collection agencies will call incessantly during the first few months because the accounts are delinquent and they think the best way to get you to pay is to call! If it did not work, they would not do it.

Creditors will tell you they have not received any notice from CareOne and they will tell you they do not accept settlements or they do not work with settlement companies. These statements are intended to intimidate you and scare you into making a payment. It is important that you do not give in to these statements and have faith that CareOne is working on your behalf to get your accounts settled.

On average, most creditors will accept 45 – 60% of the original balance over 1 – 6 payments. It can take months or years to build up the necessary amount of money in your escrow account. The amount of time it takes to settle an account may vary based on the balance of the account, the creditor, and how quickly funds are built up in your escrow account. In most cases our clients can expect to receive a settlement in months 6 – 8 if they engaged a creditor with a smaller balance of less than $1,000.

Again, settlement takes time. Years, not months.