If you don’t have the home equity or don’t own a home in the first place to avail of the debt consolidation programs available in the market today, you can instead opt for a debt settlement program. You can also use this option if you have these but still don’t qualify for any of the existing debt consolidation plans. Debt settlements are not exclusive to veterans and military servicemembers; it is made available to all types of borrowers.
Our lenders can answer your questions about VA loans here.
Debt settlement in a nutshell
Debt settlement is basically just the process of negotiating with your creditor so you can settle your debt for less than the actual amount that you owe.
Now, you must take note that such option should only be taken as a last resort. Having a settled debt in your record can seriously damage your credit score.
A debt settlement program can be done independently, but most debtors hire the help of settlement firms in negotiating. They will explain to you the dynamics of the debt settlement process, and address any questions that you may have about the issue. They can also give you tips to make the end favorable to you.
When choosing a debt settlement agency, compare rates and charges, but never compromise quality and reputation for price.
Find a loan that fits your financing needs.
The settlement process
Once you’ve settled with the firm, a counselor will speak with you about the current status of your finances and from there, help you structure a game plan. This game plan contains the amount of money you should be able to set aside regularly for a determined period of time. Once the timeframe is completed, the agency will then contact your creditor on your behalf to make the negotiations.
They will try to convince the creditor to accept the total amount that you were able to save, and forgive the remainder. Once the creditor gives his or her affirmation, the transaction is then considered closed and you no longer owe the amount in the books.
But what happens when the creditor refuses to settle?
This can be a tad problematic since your creditors are under no obligation to negotiate with you. They also have every right to demand a full payment for the debt.
If you are in such a situation, remember that it’s no use appealing to them with tears and stories about how bad your life had gotten. Instead, talk to them in terms of money. Revise the terms of your negotiation and use all possible positive elements that will oil the friction out. Lenders are always willing to talk in dollars; use facts to beautify your offer.
If, after everything, the creditor still refuses to settle, the least thing you can do is to pay the debt in any way you can. This might involve tightening your belt a little bit more, maybe taking another job, refinancing your
mortgage. A little savings here and there can seriously add up to help you with your finances. Simply accepting the fact instead of blaming yourself for such a mess will not in any way help. With a little stretch of hard work and patience, you will be surprised at your progress in the long run.
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