What Is Debt Settlement?
Many people find themselves in a situation where overwhelming debt has taken hold of their lives. The ability to successfully pay back 100% of what is owed becomes unattainable. Once you find yourself in this situation, it is best to take action before creditors begin thinking about lawsuits, judgments, garnishments or worse. Debt settlement can help you take control of your financial situation. By agreeing to settle your debt for a sum less than that what you owe, you have the ability to get out of debt faster and with less money.
Our firm will help you formulate a plan to settle the balance on your debt. Our negotiators will contact your creditors directly and work out a settlement, which in many cases will be for less money than what you owe. You agree to make an affordable monthly payment toward the debt. Once the debt has been negotiated, we will pay your creditors directly. Any balance that has been forgiven will be included in the settlement agreement with the creditor and you will not be required to pay anything further. We will continue through this process until all your debt is settled.
What Is Debt Consolidation?
Debt consolidation requires you to obtain a loan in an amount necessary to pay your creditors in full. Typically, the loan would be at a better interest rate than what you are currently paying on your debt so that you are able to save money or make lower monthly payments. Any loan requires credit approval. You will not save a tremendous amount of money, only what you save on the interest rate as you are paying off the full balance of your debt. This option might be useful if your existing credit score is high enough to qualify for the loan at a lower interest rate.
Should I Just File for Bankruptcy?
Bankruptcy of any chapter should always be a last resort. If you are currently facing a pending judgment, garnishment, foreclosure or repossession, you should consider filing bankruptcy. If you feel that even with Debt Settlement you still would not be successful or able to pay off your debts entirely, then bankruptcy still might be the answer. Many people attempt Debt Settlement or Debt Consolidation prior to filing bankruptcy. If successful, Debt Settlement can keep you out of bankruptcy.
Bankruptcy is a court proceeding and you might risk losing certain property depending on which chapter of bankruptcy you file. Debt Settlement does not have any such risks. For some people, bankruptcy is not an option due to being risk adverse, morally opposed to bankruptcy or other reasons for not wanting to file bankruptcy. Debt Settlement gives you an option to get out of debt without having to go to court.
What Percentage of My Debt Can I Expect to be Reduced?
All creditors are different and each creditor’s willingness to negotiate may vary. Although there are no guarantees as to what percentage we may be able to reduce your debt, you can be assured that we have experienced debt negotiators who have successfully negotiated thousands of dollars of debt for our clients. In most cases, we can settle your debt for as much as fifty percent of what you owe or more. You should expect at least a minimum 20 to 30 percent of your total balance to be successfully negotiated. This also depends on the type of debt you want to negotiate as well as the number of credit accounts we are handling on your behalf.
What Are My Out-of-Pocket Costs to Start the Process?
We charge a small one-time fee to run your credit and prepare your re-payment plan. Once we have agreed on which creditors you want us to settle on your behalf, we formulate your plan, and you start on monthly payments to our Firm’s client trust account. When we have a settlement offer, we will contact you for approval and pay the debt. You will receive a settlement statement from the creditor with the legal terms reviewed by one of our lawyers. Depending on the size of your total overall debt, the Firm will take a percentage of the debt for our fees, but these fees come from your monthly payment plan, so you are not paying anything extra out-of-pocket other than the one-time upfront fee
to get the process started.
How Long Are the Payment Plans?
For most of our clients, the payment plan can be anywhere from 2 to 4 years of payments. The higher the total balance, the longer the plan. This way, we can keep your monthly payment manageable and affordable for you. Once you have paid in enough money for us to be able to settle your debt, we start negotiating on your behalf.
We Notify Your Creditors
We will notify your creditors that you are now being represented by our Firm. We likely will have funds to settle your debt and we will soon be negotiating on your behalf. We will require you to sign third-party authorizations so we can talk to your creditors on your behalf.
What Happens If I’m not Successful?
We all know things happen and life is hard. If something prevents you from successfully negotiating all your debt or continuing with the program, any money remaining in your account will be refunded back to you. You can also choose to convert your agreement with our firm to a bankruptcy, if it becomes necessary.
What Rights Do My Creditors Have?
The reality of it is that creditors still have all rights available to them while you are attempting to negotiate. This means they can still contact you, send you mail, file lawsuits against you, obtain a judgment, garnish your wages or levy your bank account. The further you are along in this process, the harder it will be to negotiate since more fees, costs, interest, and penalties have been incurred by the creditor. However, our experienced attorneys can get the job done for you and find some relief for you.
Can Debt Settlement Stop A Pending Lawsuit or Garnishment?
Filing bankruptcy is really the only option to stop a pending lawsuit or garnishment. However, we can still attempt to settle the debt or get you on a payment plan outside of a garnishment if necessary. Sometimes the payment plans are for less money than what would be taken out of your paycheck on a court ordered garnishment. We can also attempt to settle the matter for less than what you owe so that you can be in the best position possible to eliminate your debt.
What Are the Consequences of Debt Settlement?
Debt Settlement will not help you improve your credit score. Actually, your credit score may continue to decline while you are attempting to settle your debts. You can begin to rehabilitate your credit after all your debt has been settled or paid off. Creditors will report that you paid less than the full balance owed or other similar language on your credit report. Anyone who obtains a copy of your credit report will see that some debts were settled, which may lower your credit score or your ability to obtain new credit. Additionally, you may incur tax consequences by settling your debt. Any forgiven debt will cause you to receive a 1099c for cancellation of debt, which will be taxed as income. You should always consult with a tax professional or CPA when settling your debt to find out what those tax consequences might be.
When the amount of debt you have becomes unmanageable, it’s time to act so that you can avoid further legal action, garnishment, judgments, increased interest rates, fees, penalties, and legal costs. Creditors will continue to attempt to collect from you, unless you pay or settle the debt or file bankruptcy. By working with us on your Debt Settlement plan, we can contact those creditors on your behalf, negotiate a settlement, get the creditor to agree to hold off on legal action, judgments, and garnishments until we have had the chance to make good on our negotiated debt and plan payments. Keep yourself out of jeopardy of losing more money, your property, and further hits to your credit rating by hiring us today to prepare a Debt Settlement plan for you.
Located in the Greater Phoenix Area, we serve all 15 counties of Arizona. From Kingman to Douglas, Duncan to Quartzsite, and St. Johns to Yuma, Gaudiosi Law is here for you. CALL 623-777-4760. Gaudiosilaw.com