By If you are struggling with debt, the most common option is to work with an Albuquerque debt settlement company. These companies negotiate with creditors on your behalf, aiming to get you a lower payment amount than what you currently owe. Debt settlement will affect your credit score, and it may require you to stop making payments to your creditors while the settlements are negotiated. However, a debt settlement program is not for everyone and should only be considered after exploring other options such as a debt management program.
Not all debt settlement companies operate ethically. There are many that charge high fees, make unrealistic promises or even fail to settle your debt. Researching the Consumer Financial Protection Bureau (CFPB) complaint database is an excellent way to ensure you are working with a legitimate, reputable company.
Before getting started with a debt settlement program you will likely have to wait until you have enough money saved up. You will deposit money each month into your settlement account which is held by the debt settlement company and used to make settlement offers. Most people don’t have a lump sum of cash sitting around so the debt settlement company will work with you to figure out how much you can afford to set aside each month. This will be based on your budget and the amount of debt you have.
Once enough money is available the debt settlement company will contact creditors on your behalf to start negotiating a debt settlement. Most unsecured debts, such as credit cards, payday loans and medical bills can be settled. Some unsecured student loans, including private student loans can also be settled but the lender will need to verify ownership of the debt and the ability to collect on it.
While settling debt will negatively impact your credit, it is not as damaging as a bankruptcy. The impact can fade over time, and your credit score will rebound. In addition, if you are careful, it is possible to avoid a dip in your credit score by asking the creditors to “re-age” the account. This means that the creditors will change the status of the account from delinquent to “paid as agreed.”
Debt settlement is a great solution for people who are struggling with debt and want to find a way out. However, it’s important to understand all of the options and ramifications before taking the leap. If you are unsure of what your best course of action is, consider speaking with the best debt relief company in New Mexico. They can provide unbiased advice and may be able to help you explore other debt relief options.