Debt Settlement: Working and Risks
Debt settlement refers to the settlement with your creditor where he has agreed to accept a less amount in full settlement of the amount you owe to him. In other words, it also means that the creditors won't hound you anymore for its money. Debt settlement companies act as negotiators who negotiate your settlement with the creditors.
- The option of the settlement of debt can destroy your credit.
- To settle may take a long period,i.e. from 2 to 4 years.
- This alternative can be expensive.
It seems to be a good deal, but it might even be risky due to the following reasons:
What is the working of debt settlement?
The work of settlement of debt comes into play only when you have many late or skipped payments and also collection accounts. No creditors or collector will accept a lesser amount unless there is a reason to believe that you can pay a full amount what you originally agreed to.
Debt settlement agencies will negotiate with your creditors to pay a lesser amount, especially on the unsecured debt like the credit cards.
Risks associated with a debt settlement
- Penalty fees and late charges continue to accrue on you.
- It always doesn't guarantee a successful process.
- You might be required to pay additional fees apart from the settlement fees like setup and monthly expenses.
- Your credit might even take a hit.
- The debts which are forgiven may be taxable as that is regarded as an income by internal revenue service.
Given below are some of the risks associated with it:
If you require services regarding the settlement of debt, visit us at Ooraa and get a smooth settlement of your debts with our help.
Please note that all calls to the company may be recorded or monitored for quality assurance and training purposes.
Ooora Debt Relief helps its customers to understand the different choices they have to get rid of unsecured debt. Based on the conservative estimates clients that enroll in our Debt Management Plan and make all their payments on time generally experience a 50% reduction of their enrolled balance before our fees and about 30% reduction after payment of fees over12-48 months. Individual results may vary and are dependent on factors such as the total amount of debt, creditors’ cooperation, ability to save and successful completion of the program. Ooraa Debt Relief does not guarantee percentage reductions or the specific period in which the consumers’ debt will be resolved. We do not charge any upfront fees until a settlement that you have approved has been negotiated and at least one payment has been paid towards it. We do not provide tax, bankruptcy, legal or investment advice. Depending on your state we may be able to suggest a local tax professional or a bankruptcy attorney. Our program is not available in all the states and fees may also vary from state to state. Please consult a tax professional to consider the tax consequences of debt settlement.
The simulated savings calculator on our website is for illustration purposes only and may not always be accurate since they vary by each client’s unique situation. You should get a specific estimate from our company office for an accurate assessment before you decide to enroll in our program.
Please read and understand the contract terms and how the use of these services can adversely impact your credit before commitment.