Business debt settlement could be used when there are multiple skipped or late payments. Your creditor would not be accepting less than the amount you owe if you are capable of paying the full amount which was agreed to originally. Business debt settlement would mean you have been able to negotiate well with your creditor as he has agreed to accept an amount that is less than what you actually owe. It also implies that collectors would not hound you anymore. Business debt settlement is your ticket to a debt-free and stress-free life. Here are a few things that you must keep in mind and avoid.
Do Not Pay Upfront Fees
Debt settlement companies are actually banned from taking any advance charges or fees from their clients before reducing or settling consumer’s unsecured debts or credit card debts as per the regulation of ‘Federal Trade Commission’ that actually came into effect in October 2010. This particular rule also mentions precisely that consumer’s money that has been kept aside for paying debts must be maintained meticulously in an account at one of the insured financial institutions. Moreover, consumers have the right to withdraw from the debt relief service whenever they desire without paying any penalty.
Do Not Assume that Debt Settlement Will Not Hurt Your Credit Score
If you are the owner of a startup that is drowning in debt, business debt settlement may adversely impact your credit score. However, the entry in your credit report would be erased completely after only 7 years while the entry will remain for 10 years in case, you file for bankruptcy. Debt settlements, defaults, and other such events will not impact your credit score unless reported. Go through debt settlement reviews for a clear understanding and perfect solutions.
Do Not Take it For Granted that a Debt Settlement Company’s Charges Are Nominal
Debt settlement charges may not be astronomical but they are also not a cost-effective option. A debt settlement company is supposed to charge a substantial portion of the consumer’s total debt or in terms of the amount forgiven. However, the debt settlement company would not be taking away its pay-packet until they have helped you by reaching a settlement and you have approved the terms of the agreement. Moreover, the forgiven amount is often taxable.
Do Not Believe that Once Negotiations Are Done You Would Be Out of Debt
You must keep in mind that some debts would not be qualifying for debt settlement and that may include alimony, child support, student loans, and taxes owed etc. Moreover, in many cases, there is no scope for settling secured debts such as home or auto loan. However, you may come across exceptions to that particular rule. You may settle secured debts in the event that the asset securing the loan has no value currently or has already been repossessed. Some instances are a second mortgage on already a foreclosed property or even a totaled car or truck or other vehicles.
You must remember that debt settlement could be like a boon to the businesses. However, you must not always expect magical solutions. Keep the above points in mind and choose business debt settlement to solve your financial issues using a better judgment.