The Liklihood of Success Using Debt Settlement

There are a number of factors that the average debtor must consider before calling upon the services of a debt settlement company. Essentially, one must ask, “How successful will this program be for me?” For a number of consumers, debt settlement may not the best option to achieve financial freedom. There are a number of credit card debt help alternatives to consider for those particular consumers. However, the best way to comfortably decide if debt settlement will be the most effective approach in ridding yourself of the debt obligations that burden you, consider the following factors that typically determine how beneficial a settlement program will be:

1) Who your creditors are.
A large determinate of how successful a settlement program will be is what creditors you actually owe. In simple terms, there are a number of creditors who are very difficult to negotiate with and who typically won’t agree to low settlements. Citibank, MBNA, and Discover are three creditors who typically refuse to settle for anything less than 60-70% of your total debt. As a result, if you are a consumer who only owes on, for example, three Citibank accounts and one Discover account, a debt settlement program will certainly be a less beneficial approach in relieving your credit card debt. If you are indeed in this situation, contact our provider for additional debt help advice.

2) Your hardship status.
Typically, debt settlement organizations are more successful with clients who have a documented hardship. If your financial situation and subsequent enrollment in the program is a result from a particular hardship that has caused you to miss payments or fall behind, negotiators are more understanding and willing to settle for a lower percentage of your overall debt. Medical bills, loss of employment, and divorce are three of the more common hardships owing consumers face today. If you are able to provide documented evidence of your particular hardship, a debt settlement program is likely to reach more favorable settlements on your behalf.

3) Your recent account activity.
There are three things in your recent account activity that may have an adverse affect on negotiations: recent balance transfers, cash advances, and luxury purchases. If a creditor believes your intentions were not genuine during your enrollment in a settlement program, negotiations are likely to be less successful. For example, if you are enrolled in a program and proceed to go out and buy a plasma TV for your apartment, the creditor is going to question why that money did not go towards paying off your debt. As a result, the creditor will be less likely to reach a low settlement if any at all. The goal is that your recent account activity does not appear fraudulent in any way so the debt settlement company can provide the best debt help service possible.

4) Your credit history.
If you have filed bankruptcy within the last two years, the likelihood that a settlement company will be extremely effective is marginally low. The reason for this is because you are not eligible to file for bankruptcy for another five years. As a result, the creditor knows there is no risk in losing everything they could potentially collect if you had the ability to file for bankruptcy. They will see no incentive at that point to agree to low settlements. If, on the other hand, you filed for Chapter 7 bankruptcy five or six years ago, negotiators will likely be more successful with your creditors. The reason for this is the fact that you could potentially file for bankruptcy again in one or two years, and this poses a threat to the creditor because they wouldn’t be able to collect any percentage of what you owe at all if that were to occur. In this case, debt consolidation through a debt settlement company may be your best bankruptcy alternative.