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How to Settle Your Debts in Arizona

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In a Nutshell

Once you’ve gathered the details about your debts and your ability to repay them, you’ve started work on a budget. If you decide to pursue a debt settlement, then you’ll need to know how and who can help you do it.

Written by the Upsolve Team
Updated March 26, 2021

Former Arizona Governor Fife Symington declared bankruptcy in 1995. Also, the Bob Bondurant School of High Performance Driving, the world's first formal learning institution for developing race drivers, located in Chandler, Arizona, filed for Chapter 11 bankruptcy protection in 2018. In the last 50 years, motor racing's most prominent professionals have enrolled in Bondurant's school, as well as a few celebrities.

Whatever the type of debt, federal student loan or credit card debt, lenders are in business to make profits, as we all know. Their main goal is “making the most” while “losing the least,” which means they try to minimize the negative effects and cut their losses when customers stop paying their minimum monthly payments. It happens every day and is just a cost of doing business. Keep in mind, a delinquent account is just another statistic in the eyes of the bank. It’s a matter of saving the most dollars by trying to cut their losses when they can't recover the total amount of debt that's owed to them. Sure, a credit card company will first exhaust its efforts making collection calls. Eventually, it will turn the account over to a collection agency or sell it to another debt collector. 

This often helps consumers who are uncomfortable not paying their creditors in full to understand that this will hurt the lender much less than struggling to make debt payments will hurt a consumer. Creditors “lose the least” by selling debts, assigning debts to collection, or referring larger, or longer delinquent debts, to an attorney for a civil lawsuit.

Keep in mind that free, no-obligation services are available to help you, whether you’re in Phoenix or Prescott. You have options for solving your temporary financial misfortune. And it is temporary. You can solve it. A debt settlement program is just one way of finding effective debt relief. Look for experienced, trustworthy, qualified agencies to help you. There are several experienced, licensed credit counseling agencies that offer free help and can tell you about your debt relief options. Or do it yourself. While there are many reputable organizations that aim to help people solve their financial problems, there’s no reason you can’t engage in debt negotiation and arrange a debt settlement agreement yourself. Bankruptcy is not the only solution for having debt problems.

If you have too much unsecured debt, you may be a good candidate for an Arizona debt settlement. This allows you to repay a debt at anywhere from 30 to 70 cents on the dollar, depending on the creditor and other various factors worth consideration. You’ll have to make a one-time lump-sum payment or multiple payments pursuant to the payment plan negotiated in your settlement agreement. Most creditors prefer a lump sum to cover the debt amount. The debt settlement company negotiates the deal and transfers it to creditors at the appropriate time. 

Learn More Through Free Nonprofit Credit Counseling 

Many experienced, trustworthy debt relief agencies that offer credit counseling and debt settlement programs are available to help you with initial consultations at no cost or obligation.  

If you have too much student loan debt that’s causing you problems repaying unsecured debt such as credit card debt, you should schedule a consultation with a qualified credit counselor as soon as possible to discuss improving your financial situation and solving problems caused by unsecured debt with high interest rates.

Licensed credit counselors can explain the positive and negative aspects of every debt relief option. They can help you understand which option best fits your financial situation, considering both your present and future goals. They can help you develop an action plan to meet these goals. Credit counseling agencies often offer additional services depending on the overall results of counseling. If you’re eligible, the credit counseling counselor can recommend a debt management plan. 

How to Settle Your Debts in Arizona

Once you’ve gathered the details about your debts and your ability to repay them, you’ve started work on a budget. If you decide to pursue a debt settlement, then you’ll need to know how and who can help you do it.

Collect Details About Your Debts 

Now it’s time to gather all the important information about your individual secured and unsecured debts. Recent account statements with each debt’s current outstanding balance, interest rate, and monthly payment amount should provide the information that you need. Do this for every one of your debts, even those you don’t want to settle. Even student loans.

Get a current credit report from the main credit bureaus and review every debt. It will help you decide which of your debts are best for settlement. Organizing a list of each debt with its relevant details will allow a credit counseling agency or debt settlement company to get a clearer picture of your current financial situation. The more information a debt relief agency has about your debts, the better it can evaluate your needs and find solutions. It will also help make you more informed and in a better position to move forward and consider other options like debt consolidation and debt management.  

Collect Details About Your Ability to Settle Your Debts 

What resources do you have available to participate in any kind of debt settlement program? For a debt settlement to work, you either must have the ability to accumulate income or sell valuable property quickly. 

Do you work, or do you pay your living expenses from non-employment income? If you work, are you self-employed? Just as expenses may be fixed or variable, income can be as well. If you always work forty hours a week, no more, no less, and earn a fixed hourly wage, it’s easy to determine income for creating a budget. If you’re self-employed and some weeks are better than others, then it’s more difficult to determine income that’s representative of a typical work week.

After you have a clear picture of what your income is every month, consider your expenses, which you can separate by those that are fixed and those that are variable. Fixed expenses don’t change much, if at all, from month-to-month. Student loan payments, cable, internet, car insurance are some examples. Variable expenses change monthly based on use, need, and other reasons. Groceries, gas, and recreation costs are types of variable expenses. A good way to estimate all your expenses is to review your bank statements for the last 3 months  and then dividing the total for each category by 3 (or however many months of statements you reviewed) 

Whatever amount of money remains after subtracting expenses from income is the amount of disposable income available to pay creditors. With all this information at hand, you can consider and decide whether a debt settlement will work for you and help you accomplish your financial goals. If you don’t have enough disposable income to make a debt settlement work, you may have to consider other options, like debt management or debt consolidation, but don’t give up, even if you have a low credit score.

Learn About the Costs to Settle Your Debts in Arizona 

When determining the costs involved in settling your debts, you have to consider that there are costs that you incur whether you hire a debt settlement company or not. Remember, you’re still incurring late fees and penalties during the time that you are not actively seeking a debt settlement. Under federal law, a debt settlement company can’t collect fees from consumers until it has settled or resolved your debts. It can’t make false or unsubstantiated claims about its services. Some companies base their fee on a percentage of total debt while others charge based on the savings provided by their debt settlement program. A debt settlement company can charge only a portion of its full fee for each debt it settles.

Decide Whether to Work with an Arizona Debt Settlement Company 

There’s no rule that says that you have to hire a debt settlement company. It’s not like a debt consolidation where you need a new loan to make it work. While an Arizona debt settlement company can negotiate a debt settlement on your behalf, you can also do it alone, which will save any fees incurred by hiring a debt settlement company to do it for you. While you’re the person in control of every part of your debt settlement, you’re alone and without assistance in your quest. It can take a lot of time, energy, and patience. A risk is that you will have no ‘insider information’ about creditors and what they are likely to accept. You also won’t have anyone with experience in debt settlement matters to ask advice from or discuss strategy with before making any offer.

Research Arizona Debt Settlement Companies 

Debt settlement companies must disclose key, fundamental aspects of their services, including the approximate length of time it will take to get results, the cost, the negative consequences of using a debt relief service, and other important information about dedicated accounts if used. Some of these potentially negative effects include a drop in your credit report and credit score, the possibility of legal action; uninterrupted collection actions; and that you may incur additional fees and interest. These negative actions usually occur around the time you are asked to stop making payments to your creditors or by a program that requires you to stop making payments.

A debt relief company also must tell you that the funds, and any interest that accumulates in your debt settlement program escrow account, are yours. It must also inform you that you may withdraw these funds at any time without penalty. Any debt settlement company that tells you to stop communicating with creditors before doing anything for you is not a reputable business enterprise. If it charges fees before performing any service, it’s breaking the law. Consult with the Better Business Bureau or other consumer protection organizations to find out about trustworthy, qualified debt settlement companies. 

There are currently no specific laws governing the practice of debt settlement in the state of Arizona. All debt falls under the federal Fair Debt Collection Practices Act (FDCPA). Consult the Arizona Attorney General’s website for any changes affecting debt collection law.

How to Make Your Debt Settlement Work 

You’ve worked hard during the debt settlement process, gathering the details of your personal finance history to reduce your full amount of debt. Make sure that the due date for the monthly payment falls on a logical time - a payment due the same time of the month as your mortgage or rent may not be workable. Set up a budget that sets aside funds for an expected large one time expense, such as your annual automobile registration. Any influx of funds should be used to make extra payments and replenish your emergency fund if possible.

Alternatives to Debt Settlement 

There are alternatives if you encounter difficulty forming an effective debt settlement plan. Different people typically have different options based on their circumstances, which may have to do with their amount of debt, types of debt, and ability to receive settlement offers. Debt settlement is no different.

An Arizona debt settlement may not be for everyone, but that doesn’t mean there’s no way to escape your financial predicament. There remain effective solutions to alleviating problems repaying debts. Using credit counseling as a resource can help you learn about the pros and cons of options such as debt management and debt consolidation.

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Arizona Debt Consolidation 

One of the ways to eliminate overwhelming debt is an Arizona debt consolidation loan. This may be especially beneficial if debt settlement is not an option. Consumers can take advantage of a debt consolidation loan as a straight loan, or in an Arizona debt management plan. Both a debt consolidation loan and debt management plan combine all your debts into a single monthly payment. With solid credit, both may be available with reasonable payment terms and provide debt relief. 

Arizona Debt Management Plan 

An Arizona debt management plan is another form of debt consolidation worth consideration.  This form of debt relief typically doesn’t require stellar credit as a prerequisite to qualify. Plans are available with workable, reasonable terms for those who are eligible. 

Arizona Bankruptcy 

Once the services of a credit counseling agency have been fully utilized, you may discover that an Arizona debt management plan or Arizona debt consolidation loan is not the right option for you. At this juncture, it may be time to meet with an experienced bankruptcy attorney. Most bankruptcy attorneys in Arizona offer free consultations to anyone considering bankruptcy

If you can’t afford a bankruptcy attorney and you aren’t eligible for a debt management plan or debt consolidation loan, Upsolve can help you learn about bankruptcy. In fact, if a Chapter 7 bankruptcy is your best available course of action, we can help you get ready to file bankruptcy.

Upsolve assists those who have fallen into an unintended, burdensome financial situation, especially when caused by unsecured debt with high interest rates or overwhelming student loans. Most are hard-working Americans who may have experienced, for example, the loss of income through sudden unemployment or a dramatic increase in expenses because of a serious illness and substantial medical bills. We help thousands of Americans file bankruptcy cases each month and find debt relief. We can help produce the forms needed for filing, return them to you for completion, and then have one of our experienced bankruptcy attorneys check them to make sure everything is in order. Once ready, we return them to you to file with the court. Some people may need or prefer an attorney. If so, Upsolve can connect you with a capable bankruptcy attorney conveniently located in your area.

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The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

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