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Debt settlement is a legal process used by people or companies in debt to negotiate a settlement of an existing legal debt with their creditors. Debt settlement is not the same as Consumer Credit Counseling or Debt Consolidation. Debt settlement is for businesses and consumers. It settles the
debt with creditors to get the newly reduced balances paid in two
to three years. Settlement Corporation of America (SCOA) services
will settle your current unsecured debt balances up to 60% or more
by negotiating an agreed settlement amount with your creditors. |
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Most original creditors are cooperative. Calls may reduce after the original creditor receives a Cease and Desist letter from SCOA. Consumers do have rights against abusive collection tactics. |
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Debt settlement is a plan to renegotiate the amount of debt you owe so that the amount paid is less than that owed, yet is accepted as full payment of the debt. Many individuals who have a financial hardship find that debt settlement is the only debt management method affordable for them. Debt settlement depends heavily on using the correct approach with a particular creditor. This can be done best by hiring an experienced third party who understands current industry trends. See the following options below: |
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Interest can range from as low as 1.9% to as high as 30% and creditors can raise rates at any time. You'll pay nearly 50% of your original balance in interest over the first 3 years. You are not making a dent on your principal balance. If your rates are 25% or higher, it's practically impossible to pay off your debt by making minimum payments unless you pay at least 3% of the balance in minimum payments monthly. Even then, it would take over 35 years to pay off your debt. Read full article. |
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Filing for bankruptcy has many negative ramifications, and is used as a last resort. Bankruptcy may seem to be the quickest solution to removing your debt but it will remain on your credit for 10 years. Both Chapter 7 and Chapter
13 will represent a major negative mark on your credit rating.
In Chapter 7 bankruptcy it will stay on your report for 10 years
and chapter 13 bankruptcy stays on your report during the time
you are in the bankruptcy program plus a specified time calculated
from the date you complete the program. |
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The way Credit Counseling works is that you typically meet with a Credit Counselor who analyzes your unsecured debts, other obligations, and your monthly income. The credit counselor then formulates a monthly
budget and presents a plan that includes lowering of some credit
card interest rates and sometimes, the monthly payment typically
around 11% interest. The Credit Counseling Company then contacts
all your unsecured debt Creditors and requests that the consumer
be permitted to repay the debt at a lower interest rate. |
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