Is Debt Settlement or Debt Negotiation a Debt Option to Consider?
For individuals and families in Oklahoma that have high-balance, high interest credit cards, a debt settlement or debt negotiation program may be an option to avoid bankruptcy - while at the same time, settling debts for less than the full amount owed. The objective of debt settlement is for consumers, through a debt negotiator, to get individual creditors to agree to "settle" debts for much less than the full amount owed.
How Does Debt Settlement Work?
Debt settlement typically involves the process whereby consumers in distress stop paying high interest credit card minimums and instead begin to "set aside" those monies to be used for the purpose of extending a debt settlement offer, through a debt negotiator, to a credit card company. It stands to reason that a credit card company, facing the prospects of possibly "selling off" bad debt for as little as 10 cents on the dollar might be willing to accept a negotiated settlement offer from a consumer truly experiencing a financial hardship. While debt settlement can save a substantial amount of money and it can be a positive alternative to bankruptcy, it is an aggressive debt relief option whose drawbacks should be recognized from the outset:
Consumers should understand that when they stop paying cards according to the terms of their agreements, creditors can threaten or take legal action. In addition, money that is saved by settling for substantially less is subject to taxation. Finally, debt settlement will normally have a negative impact on personal credit, but not as serious or long lasting an impact as personal bankruptcy.
If you are struggling with credit cards and other unsecured debts and in need of debt relief assistance, learn more about your debt relief options and get a free debt relief analysis and savings estimate - at no obligation.
Debt Consolidation Through Debt Management Plans
Another debt relief option that is available to residents of Oklahoma is a debt management plan customized for individuals with the help of a credit or debt counselor. The objective of a debt consolidation or debt management program (DMP) is to combine or consolidate multiple high-interest debts into a single, more manageable, payment each month. Through the benefits of debt relief such as lower interest rates, the waiving of late fees and penalties, and generally more favorable repayment terms, a debt management plan coordinated by a credit counselor or debt counselor can provide vital assistance for consumers who need a proven, predictable, and accelerated path out of debt.
How are plans customized for each individual or family? A credit counselor or debt relief specialist typically will interview the consumer to gain a clear understanding of their debts. Then they will conduct a budget analysis with consumers to find out how much money can be realistically allocated each month to pay down those debts. Finally, based on this information, they will come up with a game plan (a debt management plan or DMP) and send proposals to each of the consumer's creditors requesting the benefits of debt relief for the individual or family experiencing financial hardship. These benefits typically include lower interest rates, a waiving of late fees and penalties, and more favorable repayment terms that are affordable for the consumer experiencing financial hardship. Those creditors who agree to the proposals are then added to the debt management plan. For those that do not accept the proposals, consumers are still obligated according to the terms of their original cardholder agreements.
While debt relief programs help many Americans during times of financial hardship, some people (including the elderly or people needing medical assistance they can't afford) may also benefit from state-assisted programs and services to help them pay for utility bills, grocery bills, or childcare. Examples of such programs include Children's Health Insurance Program (CHIP), Oklahoma Medicaid, and Oklahoma Head Start, among others. To find out more about these services designed for low-income families and individuals, regardless of their debt situation, go to the state's homepage Benefits section.
Overall, debt consolidation or debt management plans can be very effective and save a substantial amount of money only if consumers stop accumulating credit card debt and begin the process of paying down the principal amount of debt on time, month after month, at a lower interest rate. It really is a simple 1-2-3 plan: 1) Stop using credit cards, 2) Payoff existing principal debt at a lower interest rate, on time, month after month, 3) Fulfill the program as scheduled and you've earned the right to celebrate your debt-free day!
Could a debt consolidation or debt management plan help you resolve debts faster and how much could you save? Find out by requesting Your Free Debt Relief Evaluation and Savings Estimate