subject: Personal Debt Relief Options - Does Debt Settlement Make Sense Financially For You? [print this page] Personal Debt Relief Options - Does Debt Settlement Make Sense Financially For You?
Just because you want to get out of your debts fast by using personal debt relief options, it does not necessarily mean that debt settlement is the option for you. The relief option that might suit you the best can be bankruptcy, it can be debt management or it can be debt consolidation. It can also be debt settlement. If you are opting for debt settlement, try to find out whether it makes financial sense for you or not. If the method makes financial sense, you can go for it and if not, it is better you go for other options. But how to find out whether settlement makes a financial sense for you or not? Here is what you need to find out to get the answer to the question:
Find out if your monthly mean income is greater than the minimum monthly expenditure define by the government. If yes, then you are eligible for bankruptcy and settlement will make a financial sense. If no, then bankruptcy might be the best option for you. Speak to a credit counselor to find out the right thing to do.
Do you have a steady income flow? If no, settlement will not make a sense. This is because of the fact that over the period of settlement, you need to accumulate money to be able to pay at least 50% of the debt that you have to the creditor in bulk. If you fail to do so after the agreement of settlement is signed, you are in trouble. If you do not have a steady income flow then settlement is not your option.
Find out whether the overall unsecured debt is $10k or not. This means that add up the debts that you have with different creditors and find out whether those debts sum up to give the figure of $10k or not. If yes, you can go for settlement and if not, this method is not for you because the minimum amount of unsecured debt needed for settlement is $10k.
The next thing that you must find out is the amount that you save with settlement after paying the creditor and the debt settlement firm that you hire. If the amount is higher than what you actually save by self negotiation, it is better that you go for settlement with the help of a settlement firm.
So, there is a lot of homework to be done before you opt for debt settlement as a personal debt relief option. Choose wisely!
With the new FTC laws recently passed, debt settlement is a legitimate alternative to filing bankruptcy. Creditors are ready to negotiate and now you won't have to pay a fee unless your debts actually settle.
