How Debt Settlement Works and What You Need to Know

Are you constantly stressed about paying your debt? Do you make payments every month, but interests continue to build up? Perhaps you feel like you have no hope of repaying any unsecured debt. If so, you might be in search of a solution to your financial problem. When you’re in a bad financial position and looking for a fresh start, debt settlement may be the way to go.

To learn more about whether you would benefit from debt settlement, speak to a debt settlement attorney at McCarthy Law PLC. Our team of debt settlement attorneys can help walk you through the process of debt settlement and work toward erasing your debt, restoring your credit, and getting your life back on track. Although achieving financial freedom can seem impossible in your current situation, a debt settlement attorney can get you one step closer to regaining control of your finances.

What to Know About the Debt Settlement Process

Debt settlement is an effective way to resolve your debt. Essentially, it’s a negotiated agreement where your representative offers a fixed amount of money upfront in exchange for an agreement from your debt collectors or creditors to settle your debt and stop collection attempts. Depending on how much you owe, you may be able to get your debt erased entirely for a significantly lower amount than the balanced owed.

The debt settlement process can seem confusing, especially when debt negotiation companies make unrealistic promises. Some companies will recommend that you stop making payments to your lenders and overload your balance in an attempt to make them feel they have no other choice but to settle with you. The problem here is that they don’t, and even worse, your lenders can file a lawsuit against you.

When you work with a debt settlement firm, you have a better chance of getting the most out of debt negotiation and protecting yourself from any legal repercussions that may arise. An attorney will advise you through the following five steps to debt settlement:

  1. Write a letter to inform your collection agency that you dispute the debt you owe and that you are requesting for all communications to stop, or let them know that an attorney is representing you and request that all forms of communication continue directly through your counsel.
  2. Request debt validation within 30 days of being contacted by the collection agency by requesting that they prove how much money you owe.
  3. Your attorney will determine an amount you can afford and then start the process of negotiation with your collection agency, which can last anywhere between 6 to 48 months. While the negotiation process occurs, this gives you time to save money and deposit it into a secure account until the fixed amount is reached.
  4. Once a number is set, your lawyer will review your settlement agreement for any issues to ensure you’re protected and that a collection agency won’t pursue legal action after.
  5. If your collection agency is unwilling to settle and takes further legal action, your lawyer can immediately start building your defense.

Reasons Why You May Benefit from Debt Settlement

One of the main reasons people opt for debt settlement rather than bankruptcy is that bankruptcy can completely plummet your credit score and impact your credit worthiness for a long time – 7-10 years. There’s also a greater risk of losing all your assets. While debt settlement can lower your credit score as well, the impact is far less severe than bankruptcy and there are plenty of options you have to rebuild your credit. A debt settlement attorney at McCarthy Law can provide you with a detailed plan of strategies to successfully improve your credit.

Other benefits of debt settlement include:

  • Mental relief from overwhelming debt
  • No longer chased by creditors
  • Repay your debt faster
  • Save money

The sooner you’re debt-free, the faster you can raise your credit, alleviate your stress, and take control of your finances. Don’t hesitate to reach out to an experienced debt settlement attorney at McCarthy Law PLC to find out if you’re eligible for settlement.

Types of Debt Eligible for Settlement

Debt doesn’t just mean that you’re behind on payments for your credit card bill. When you’re in serious debt, you feel like you’re suffocating with no way to escape it. You won’t just be struggling to pay off one single source of debt—you will struggle to pay off all types of debt, including:

  • Credit cards
  • Mortgage debt
  • Auto/RV/boat bills
  • Student loans
  • Payday loan debt
  • Business debt
  • Small business loans

These types of debt are ideal for the debt settlement process because if you decide to file for bankruptcy, these entities risk getting nothing at all. Although they have no legal obligation to negotiate a settlement with you, they’ll benefit from collecting at least a partial amount.

Call McCarthy Law PLC to Erase Your Debt Today

If you’ve fallen behind on paying your debt, expect to receive hundreds of calls and letters from collection agencies. When you know you’re in grave debt and you have collection agencies constantly contacting you, your head might be all over the place. Let the debt settlement attorneys at McCarthy Law PLC work with you to come up with a debt-relief solution that puts your best interests at heart.

At McCarthy Law PLC, our attorneys are devoted to helping our clients navigate the challenges and consequences of debt. We are eager to help you get back on your feet and live a successful life free of debt. For a free case review, reach out to our skilled debt settlement attorneys by calling (855) 976-5777 or filling out a contact form today.

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Michael Adams

Michael Adams

Michael Adams focuses his practice in debt litigation and consumer protection. Michael regularly assist clients through the debt settlement process as well as ensuring their rights as consumers are protected. Michael is an Arizona native who received his undergraduate degree from the University of Arizona and his law degree from Arizona Summit Law School where he excelled academically.