Push Button for Debt Settlement is the process through which people seek to resolve their accumulated debt. Settlement of debts aims at paying only a certain amount of the existing debts or having the debtors forgive the whole debts. There are several reasons why people may opt for debt settlement; one of them being the inability to source for the funds (in time or ever) to pay all they owe. Whichever the case, settling of one’s debts stops the debts from rising further and gets debtors off one’s back.
People opt to consolidate debts through different means; one of them being debt settlement. Other options include: getting low interest rate loans from friends/ family/ institutions that give more flexible terms of loan repayment, entering into a consumer credit cancellation (negotiating with debtors) or declare bankruptcy.
Debt settlement companies
This is where one seeks to settle their debts through debt consolidating companies; the expectation being to have their debts forgiven in part or fully. Usually creditors do not settle debts until they are a few months overdue. This means that someone who is considering debt settlement must first halt their regular repayments for a couple of months. They, then, should engage a debt settlement company to start negotiating for a settlement. One advantage is that the creditor stops payments to their debtors and instead, pays regular reduced amounts to the settlement company. The company, in effect, invests the money in to a savings account and once it has increased to some solid amount, they call the debtors (information provided during their initial engagement) and starts negotiating with them to agree to a settlement. If the debtors agree to a certain amount- out of the total debt-, then the company pays them. The debt settlement company, then, charges the creditor as they had agreed, either a percentage of the forgiven debt or a flat fee.
The good news is that at the end of the day, everyone gets paid without it costing the creditor an arm and a leg, and they move on with your lives. The bad news is that the defaulted (and late repayment) ruins one’s credit and the bad credit record remain long after the debt has been settled; could take up to 7 years to clear and could hampers one’s ability to get employed, get reasonable insurance or even future loans.
Settlement of debts gets written off as anything, but ‘debt paid in full’. The record of ‘debt settled’ is not good enough for a person willing to have access to better financial or government services.
The other disadvantage about debt settlement is that cancelled or forgiven debts are regarded by the government as income and are, hence, liable to taxation. While debtors should send the creditor a form 1099c, for their cancelled or forgiven debts (which they do not always do), it is the responsibility of the creditor to include the forgiven/ cancelled debt in their tax return (whether the debtors sent the form or not).
Debt settlement alternative
Consumer credit cancellation: this is the best option for the consolidation of one’s debts. Although one may talk their creditor into reducing their interest rates or giving them more time to settle the debt(s), at the end of the repayment season, the record will indicate that one has paid their debt(s) in full. One’s credit is not ruined by this option, and future needs are not affected. The debtor might, from the creditor’s request, decide to reduce the amount of monthly repayable amounts (hence increase their loan repayment duration) or adjust any other terms as they two might agree on. For someone who wishes to maintain healthy credit records, settling debts through settlement companies, is out of question and consumer credit cancellation is the viable option.