The following is a guest post. The opinions expressed are those of the author, not necessarily mine.
The following guest post is by Cole Collins. Cole is a professional in the field of bankruptcy and debt settlement. He was born on june 13th 1979 in Chicago. Much of his time is spent researching debt management and sharing it with the internet community. His work can be found on different sites and blogs, including his own, Cole Collin’s Debt Management Blog.
There are obvious drawbacks – credit reports will show evidence of debt settlement and the associated FICO scores will be lowered as a result. There’s always the possibility of lawsuit whenever debts lay unpaid. Since few creditors wish to nudge borrowers toward bankruptcy – and the potential of governmental protection against all debts; a mutually-assured-destruction plan for both the creditors (unable to collect any funds) and debtors (suffering the ultimate black-mark against their financial standing for near a decade) – this rarely happens, but most debt-settlement professionals still prefer for repayment programs to be completed within a few years to avoid the legal harassment of borrowers.
As well, the specific debts of the borrowers themselves affect the success of negotiations. Tax liens or domestic judgments, for reasons that should be clear, remain unaffected by attempts at settlement. Student loans, even those not federally subsidized, have been granted special powers by recent legislation to attach bank accounts without possibility of Chapter 7 bankruptcy protection. Also, individual creditors – Discover Card, for example – tend to have an aggressive resistance against negotiations. Nature of the beast with multi-national companies, they’ll maintain corporate policies regardless of common sense.
As with everything else, unyielding business structures will change in the coming years as corporations recognize new realities, but, at the moment, there are limits to the effectiveness of debt settlement. Once again, consultation with professionals in the field should be considered the first choice. Negotiators in the settlement industry know the day-to-day specifics of each creditor’s habits – which ones were more likely to pursue legal action, for instance, and which ones would gladly reduce balances for shortened payment plans – and the wise borrower should talk to debt settlement companies that have history with each sort of creditor.
An experienced debt settlement professional will be better able to guide borrowers through what would be considered a true financial hardship as opposed to the steady accumulation of consumer debt-load. Loan balances that make up a significant percentage of the debtor’s income should still be able to receive healthy deductions, still, but all depends upon the individual’s circumstance.
Debt settlement’s a new program for a new economy – everything’s relative to your credit history (how you’ve repaid borrowers in the past), your recent credit activity (if you’ve just taken out new accounts that obviously raises flags), your specific hardships, your specific creditors, and any number of other potential variables. Don’t ever assume that you would either sail through settlement negotiations or be automatically turned away. This is the reason that consultations with debt settlement professionals are so important. It’s a new program, that’s true, but any reputable debt settlement’s analysts and consultants will know far more about the industry than any consumer could learn on their own.
There’s no easy method to grant all information and experience of how specific creditors and specific credit predicaments will react to late payments. Everything really does depend upon which creditors are owed, the causes why, and whether or not a court could reasonably expect a borrower to re-pay. The debt settlement program exists for this purpose. Their specialists have been trained for this purpose. If you believe settlement’s a possibility, the next step’s simply to talk to a debt settlement professional and ask their advice. Initial consultations should be free, and, more importantly, the settlement agent shall be the only one through the entire process of debt management solely tied to their client.