The savings from our debt reduction program are potentially tremendous assuming you complete the program and all your accounts are settled. By settling for less than what is owed and not just reducing the interest rate, settlement is an extremely cost-effective method for debt relief. Just making the minimum payments can cost as much as 3 times the balance owed before one is finally debt free. So for a $10,000 debt you end up paying $20,000 in interest alone! By negotiating the balance owed, in reality your savings constitute the reduction on the principal and the interest charges that would otherwise be paid (note:  interest does accrue on your accounts until they are settled, however). This being the case, debt settlement is a great option for consumers who are overwhelmed by their minimum payments and don’t find themselves actually bringing down their debt. That being said, however, debt negotiation is not for everyone. Three scenarios in particular stick out as examples of when our debt reduction program may not be your most cost-effective option: a) you have a high credit score; b) your debt amount is not high, c) the likelihood that you’ll be able to complete the program is low because you anticipate budgeting problems.  Please note that if you don’t fall under these categories it does not ensure that our debt reduction program will ensure you of savings.  Situations and results do vary.  The following are common situations where someone could encounter problems not realizing savings by using a debt relief service such as ours. 

Those with good credit

Why don’t people with good credit have to worry about their savings? Future interest charges may outweigh what we save you. Even though debt reduction can save you tremendous amounts of money, it is possible that you’ll end up paying more in subsequent interest because debt settlement affects your credit score negatively and hence, the interest rate of your future loan.

Needless to say, the impact of settlement on your credit is more dramatic if you have a higher score. So if you have perfect credit when you enter a negotiation program, the subsequent higher interest rates that you would have been able to obtain when applying for loans may end up costing you more than we’re able to save you. This being the case, consumers with very high credit scores or low debt amounts should consider the following prior to doing debt settlement:

-How desperate is your situation? If it’s likely that the minimum payments will overwhelm you, what options are available to you? Can you refinance your home or get a home equity loan? If any of these options are available to you and you can afford it (be very careful though…you don’t want to lose your home!), then debt reduction may not be your best bet.

-When do I plan on applying for credit again? Generally, lenders look back at least the past 2 years of your credit history. Like most things, time heals the credit impact of debt negotiation, so the longer you can hold out on applying for credit, the better off you’ll be.

-If you do plan on using credit, what sort of loan will you be applying for? The cost associated with doing debt negotiation will be higher for getting a mortgage than if you apply for car loan. After all, 10% interest on a $200,000 loan is a lot more expensive than 10% on a $20,000 vehicle.

In the end, debt reduction is a great option, but the future implications of enrolling in our program should always be considered beforehand. We’re confident that we can help resolve any outstanding credit card debt, but it is important that you first understand how our program will fit into your individual situation.

Those Who Have Low Balances & Don’t Owe Much

With clients who have low balances, the reasons why savings tend not to be higher are two-fold.  For one, you have to ask yourself – is the credit impact of debt settlement worth it for this small of a debt amount?  Ultimately, this only can be answered by the client because what’s affordable for one person may not be for another because of their income or other necessary expenses.    

The other reason why low balances can be a problem is because late fees tend to inflate the balance much more on a percentage basis than larger accounts.  As mentioned previously, late fees and interest accrue until an account is settled, but the reason why it impacts smaller accounts more is because the late fees are usually flat, so $30 on a $600 balance will increase that account much more on a percentage basis than a $15,000 one.  This being the case, getting settlement terms that offer a deep reduction in the original balance can be difficult and therefore, you may want to consider another avenue if your accounts fit this profile. 

Thos e Who Cannot Afford the Program

Unfortunately, Franklin Debt Relief cannot determine whether or not you can afford our program – only you can.  Many people in debt problems, however, overestimate what they can afford on a monthly basis, and after enrolling in our service figure out that they can no longer manage the program payment.  Unfortunately, they lose all the fees they paid to us up to that point because our money-back guarantee does not apply to clients who cancel their program early.  Before choosing our service, sit down and analyze your budget and make sure this is something you can afford.  That means making sure you have enough “breathing room” in the event random expenses pop up.  If the program’s payment leaves you no flexibility or savings on a monthly basis, you should realistically assess whether to do this. 

If you’re interested in discussing whether debt negotiation is the right program for you, please feel free to talk to one of our honest and ethical consultants at (877) 274-1260, or you can fill out a form and we’ll contact you as soon as possible.