Almost everyone knows how it feels to be overwhelmed by crushing debt where every payday is just a reminder of the long way you still have to go to settle your debts. The perspective of the majority of people who are in debt starts becoming bleaker every time their debt increases. Fortunately, there is light at the end of the tunnel. Waiting for the debt to magically disappear is quite convenient, but it’s also unrealistic. The process may take some time, but the closer you get to settle it, the more comfortable you’ll feel. We’ve gathered a list of the most efficient ways that you can follow to reduce or completely settle your debts for good.

Definition Of Debt Settlement

Debt settlement is commonly known by other names like debt relief or debt adjustment. It operates on the basis of reducing the debt of the debtor to more convenient rates to streamline the debt repayment process. The reduction of debt can range from 30% to 80% in some cases. The catch is that you have to promise the agency or firm a big lump-sum payment to initiate this recourse. If the debtor decides to hire a firm instead of settling it themselves, they pay the firm a fee cut as a percentage from the total enrolled debt. It’s important to note that debt settlements usually include tax costs as they can be considered a taxable income. In some cases, an attorney can help you prove insolvency to the government so you don’t end up paying that specific tax.

Using A Firm To Settle

If you can’t manage to settle the debt on your own, using a firm to help you out is recommended. If you live in Scotland, a trust deed is one of the most popular ways that the government offers to debtors. The trust deed specialists from https://www.scottishtrustdeed.co.uk/ explain that this can be one of the most efficient ways to pay back your debt, especially if you have a low credit score and don’t qualify for loans. The process usually takes 7 weeks on average to finalize the paperwork before you sign an agreement with your insolvency practitioner. Once you meet the obligations of the contract, you can rest assured that the rest of the debt will be discharged from your account.

Using Delinquent Taxes And Child Support In Your Favor

Debts have ranks that define their priorities in the eyes of financial institutions. Some kinds of debts have leverage over others. Taxes and child support are considered one of the highest priority types of debt that trump credit card bills and medical expenses. It’s not really a good idea to be behind on taxes and child support, but you can use it to your advantage to negotiate a lower settling amount. Debt firms know that even if they manage to get a ruling against you, they won’t be able to change the priority of debt repayment in favor of taxes and child support in wage garnishment procedures.

Negotiating With The Lender

Once you’re serious about settling your debt, in addition to having some savings stashed somewhere to help you in the negotiations, call your lender. You should preferably look for an individual who is higher in the hierarchy ladder to negotiate with. You should start to explain that your situation isn’t an easy one with no available solutions. You should focus on the main point of the discussion which is that you’ve managed to collect a respectable sum of money and would like to settle the debt of one of your accounts. Mentioning that you have multiple debts to multiple lenders will make the person you’re negotiating with try to offer you a competitive deal, because they know you can still possibly look for other deals.

You can lead the negotiation by offering a substantial amount of your debt to be removed in turn for the settlement. Expect the agent or manager to counter you with a lower offer, so try to take into consideration that these negotiations may go back and forth for a while. If the lender offers you a good deal, you’ve done a good job. If the lender is stubborn and you see no better deal on the horizon, you can negotiate with a different lender or account. Make sure that you have a written agreement once a deal is finalized because lenders can turn the rest of the debt to a collection agency if it’s only a verbal contract.

Settling debt is not an easy process, but sometimes, it’s the only way out of crushing debt. You need to know that there is no standard process and you’ll have to do a bit of research and negotiation to get the best out of a debt settlement offer. Most importantly, be patient and weigh your options to land the best offer on the table.