Debt Settlement Programs and Services
What you need to know
How would you like to repay only 30% to 50% of the money you owe your creditors? This is how many people first hear about debt settlements and start debt settlement programs, but is this true? Can you really get out of your debts this easily? What’s the catch? For those who really want to know, we’ve laid it all out. Here is what you need to know (we also have a video of what you need to know about debt settlement programs):
Debt Settlement Negotiations and Options in Canada
Possible But Not For Everyone
It’s possible to settle your unsecured debts with your creditors for less than you owe them. We successfully negotiate settlements all the time, and in some cases we’ve negotiated settlements for as low as 19% (this means that if someone owed $10,000 on their credit card, they only had to repay $1,900. This, however, would be an exceptional situation).
Debt Settlement Service
The 1st Catch: Debt settlements require a legitimate reason
A debt settlement service has to present your case to your creditors and convince them of why they should agree to less than full payment of your debts. Creditors are smart people. So there has to be a legitimate reason.
Pitfalls of Debt Settlement Negotiations
The 2nd Catch: Debt settlements require a lump sum
You have to have a lump sum of money to settle your debts. For example, if a creditor accepts a debt settlement company’s proposal for you to repay your $10,000 debt for only $6,000, you must be able to pay the $6,000 right away. Most people don’t have a rich uncle or a Fairy Godmother who will lend them the money necessary to settle their debts. If you can’t pay the money right away, the settlement offer will expire and there are no guarantees that the same offer can be negotiated again.
For Profit Companies - Warnings
The 3rd Catch: Debt settlement companies only want profitable clients
Many for-profit debt settlement companies will offer to do debt settlements for anyone with $10,000 or more in debt (if you owe less than $10,000 you are not profitable enough for them so they may refer you to a non-profit organization like us), but just because they will offer to help you, does this mean that this is a good idea? Only settling a portion of your debt doesn’t improve your overall financial situation.
Learn More About Settling Debts