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- 3 min read
Debt settlement is an extreme solution suitable for serious debt issues. Learn how it works in this debt settlement video with Bradford Stroh.
Debt settlement is a form of Debt Relief using the process of negotiating with creditors to accept about half of the total debt you owe. In order to qualify, you must be delinquent on your payments and will probably face aggressive collection attempts. This solution is only appropriate for serious debts with no other solutions. If you choose this option, look for a reputable debt settlement company to ensure your debt is settled fairly.
Video Transcription;
"Hi, my name is Brad Stroh from Bills.com and I wanted to talk to you today about an aggressive debt resolution strategy called debt settlement. What that means is debt settlement is literally a firm that negotiates settlements on your behalf or sometimes consumers can even do it on their own to negotiate themselves out of their credit card debt. The benefits of negotiated debt settlement are typically allows you to save about half of what you owe, reasonable estimates of what you would save would be settlements on the order of magnitude of forty to fifty cents on the dollar of what you owe. What that lets you do in most debt settlement program are set up to get a very low monthly payment get you out of your debts for a big discount and get you debt free in a really short amount of time. It is important though, that each consumer evaluates what their specific situation is and their goals, because there are some negatives to a debt settlement program. Specifically to qualify for those settlements you must be delinquent on your credit card accounts or your unsecured debts, which means your credit rating will be impacted, potentially, dramatically negative in the short term. It also means you could face some collection calls or harassment from your creditors so it is really for people who need an aggressive form of getting out of debt.
Again, the benefits are low monthly payment, save a lot off of your debt and debt free fast, but it’s not a walk in the park and it is really for people that can’t afford to pay their bills or don’t have other alternatives to getting out of their debts. But for people that really want to solve a serious debt problem in a short amount of time and take an aggressive approach, debt settlement can be the right approach. Now when you pick a debt settlement company you certainly want to do your diligence make sure you pick a company that has been around for several years, ideally a member of the better business bureau, member of the industry associations, and a company that has helped save thousands of dollars for thousands of clients, we would recommend companies like New Debt Relief, Debt OK or Freedom Debt Relief, all of which can be available at the Bills.com saving center as well."
Dealing with debt
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in New Hampshire, 17% have any kind of debt in collections and the median debt in collections is $1672. Medical debt is common and 6% have that in collections. The median medical debt in collections is $500.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.
