How to Settle Your Debts in Idaho
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The rest of the guide will empower you to gather and review your financial information, so that you can determine whether debt settlement is the best debt relief option for your family at this time. If debt settlement isn’t an ideal choice, this guide will also introduce you to some debt relief alternatives that may be worthy of your consideration.
Written by Upsolve Team.
Updated March 26, 2021
Are you increasingly anxious about picking up your phone when it rings for fear it is a collection agency calling? If so, then perhaps the debt settlement process can help you get your finances back on track. Debt settlement allows you to pay less than the outstanding balance you owe your creditors in exchange for partial forgiveness of that debt and the closure of your account. Creditors know that a great deal of debt that is more than three months past due will never get paid. So, they may be willing to accept a significant fraction of your total balance (paid in a lump sum) in exchange for partial debt forgiveness on the remaining amount owed. A debt settlement may be a good option for you if your credit score is already low, as this debt relief option will temporarily damage your credit score.
Secured debts (car loans, mortgages, etc.) are those in which your property can be repossessed if you default on your payments. Secured debt is generally not eligible for debt settlement, as creditors prefer to exercise their repossession rights in the event of a payment default. However, unsecured debts (credit cards, medical bills, etc.) may be settled under the right circumstances.
An Idaho debt settlement company may be able to assist you. Reputable companies have experience with negotiating with creditors to achieve successful debt settlement agreements. But before you decide which company to work with, you’ll want to research the reputation of any company that interests you. This can help you to avoid falling prey to scams. Debt settlement is a riskier process than some debt relief alternatives. As a result, it’s important to think carefully about whether this is the best option available for your circumstances before committing to settle your debts.
Learn More Through Free Nonprofit Credit Counseling
A licensed credit counselor can help you to determine whether debt settlement may be a good fit for your financial circumstances. These professionals are experienced in personal finance and money management and can provide you with personalized recommendations for how to reach your financial goals. If you look for a counselor who works for a credit counseling agency that is a member of the National Foundation for Credit Counseling (NFCC), you’ll be able to take advantage of a credit counseling session at no cost to you. The NFCC holds its member credit counseling agencies to the highest industry standards, so you can feel confident that the advice you’re given during a credit counseling session with a counselor employed by an NFCC member agency is solid.
You may be wondering how credit counseling works. Rest assured that everything is confidential. Your credit counselor will go over your finances. They will look at your expenses, debts, income, and other aspects of your financial circumstances. In doing so, they will determine which debt relief option (or options) is the best way(s) to reach your goals, based on your financial situation. You may be considering debt settlement. However, your credit counselor may recommend another option like a debt management plan (DMP). If this is the case, just ask your counselor why debt settlement is not (in their opinion) the best debt relief option for you. At the end of the session, you’ll be given a detailed and personalized action plan designed to help you reach your debt management and debt relief goals. The advice you receive in credit counseling can help you to make an informed decision about how best to move forward.
How to Settle Your Debts in Idaho
The rest of the guide will empower you to gather and review your financial information, so that you can determine whether debt settlement is the best debt relief option for your family at this time. If debt settlement isn’t an ideal choice, this guide will also introduce you to some debt relief alternatives that may be worthy of your consideration.
- Collect the Details About Your Debts
- Collect Details About Your Ability to Settle Your Debts
- Learn About the Costs to Settle Your Debts in Idaho
- Decide Whether to Work with an Idaho Debt Settlement Company
- Research Idaho Debt Settlement Companies
- How to Make Your Debt Settlement Work
- Alternatives to Debt Settlement
Collect the Details About Your Debts
Before you can determine whether you have any debts that can be settled effectively, you’ll need to gather some information about your accounts. Begin by going online to pull your free credit report. Your credit report is a great way to access your current debt information all in one place. You’ll also want to collect details about your debt by reviewing your most recent credit card statements and account statements for other unsecured debt. Pay close attention to the interest rates you are paying and current balances. Reviewing all of these documents will allow you to determine whether any of your accounts are good candidates for settlement. This process will also allow your credit counselor the ability to perceive your broader financial situation so that they can provide you with personalized guidance.
Collect Details About Your Ability to Settle Your Debts
If you don’t immediately have funds available (or property you can sell) for settlement offers, you’ll need to determine whether you can fund offers using disposable income available to you after you’ve paid your expenses. Because of the way that debt settlement works, you’ll need to be able to fund a reasonable offer within 2-3 months of starting the process. If you don’t have the ability to fund installments in this way, you’ll need to consider alternative debt management and relief options.
You can determine whether you are able to settle your debts in installments by using a monthly budget of your income and expenses. Account for both fixed expenses that remain the same (like rent) and expenses that vary (like groceries). Also account for expenses that may occur soon but don’t occur monthly, like annual car registration. Now, determine whether you have any money left over after paying your expenses to make monthly debt settlement payments for a few months in a row until you can fund a lump sum offer.
Learn About the Costs to Settle Your Debts in Idaho
It’s important to understand that you will incur costs when they use an Idaho debt settlement company. An Idaho debt settlement company will charge an upfront fee for their services and additional fees based on either the amount settled or the amount they were able to save you. The latter option is preferred because it provides the company with an incentive to get you the best deals. You’ll also incur fees and penalties on your delinquent accounts for as long as it takes to settle them. You’ll want to take these costs into consideration when weighing whether debt settlement is a good option for you.
Decide Whether to Work with an Idaho Debt Settlement Company
Maybe you have good computer skills, and are organized, and don’t mind negotiating with your creditors directly. If so, you’ll save money by not working with an Idaho debt settlement company. However, it’s important to be aware there are some risks of going it alone. For example, you won’t have access to anyone with experience to help you if you run into issues. You also risk getting bad information online. A debt settlement company will know what terms creditors typically accept. Plus, it will take an enormous amount of time and effort on your part to settle with your creditors, which may cost you more money in the long run. There is no single “right answer” to the question of whether you should take a DIY approach or work with a debt settlement company. Make whatever decision makes the most sense for you.
Research Idaho Debt Settlement Companies
If you decide to work with an Idaho debt settlement company, be wary of those who make guarantees or tell you to stop talking to your creditors without explaining the risks associated with this approach. Many debt settlement company operations are actually scams, so it is a good idea to check with the Better Business Bureau or the Idaho consumer protection division in the attorney general’s office to see whether any complaints have been filed against a particular company you’re interested in working with. A trustworthy company is one that explains their services upfront, gives you a timeframe for results, and doesn’t charge you any fees before they settle your debts. Moreover, they will explain any impact on your credit score and other risks of debt settlement and they will keep you informed at every step in the process.
How to Make Your Debt Settlement Work
Once you begin your debt settlement program, you’ll need to take steps to ensure its success. Unless you are making a single lump payment that you’re already prepared to pay, it will be important to stay current with any installment payment made into an escrow account per the terms of your agreement with a debt settlement company. Perhaps you get paid semi-monthly so you can schedule your debt settlement payments for the 16th of the month if you get paid on the 15th. A big consideration is not having your settlement payments fall on the same day your biggest monthly expense, like mortgage or rent, is due. As you complete your repayment term, you will want to have money set aside for emergencies so that unexpected payments don’t derail your ability to meet the terms of your plan.
Note that there are some risks if you hold onto one or more credit cards while you try to settle your other cards with your creditors. For instance, you may have more than one credit card with the same bank. If so, be aware that the bank may close the account with the lower balance while you are in the debt settlement process. Also, if you keep using your credit cards, this can impact the debt negotiation and settlement offers you get. Additional risks include having your credit limit reduced on the cards you are trying to keep. Remember, you can discuss whether or not to keep one or more credit cards out of your debt settlement process to use for emergencies with your credit counselor and with an Idaho debt settlement company (if you’re working with one).
Alternatives to Debt Settlement
Debt settlement is risky, so it’s important to consider whether or not a debt settlement is really your best option for debt relief before committing to this option. Idaho residents have other options available for managing debt that include debt consolidation loans, debt management plans and even filing for Chapter 7 bankruptcy; a credit counselor can discuss all of these options to help you determine which may fit your financial situation best.
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Idaho Debt Consolidation
What is debt consolidation? Is debt consolidation right for you? Debt consolidation involves streamlining your current debts so that they are combined into a single account payable by a single monthly payment. Debt consolidation can be accomplished by securing a debt consolidation loan or by entering into a debt management plan. When you secure a loan, you use the credit available to pay existing debts. An Idaho debt consolidation loan is only available to those with good or excellent credit, so those with poor credit should instead consider entering into a debt management plan.
Idaho Debt Management Plan
Another alternative to debt settlement for Idaho residents is a debt management plan or DMP. An Idaho DMP does not involve taking out a loan to streamline the debt paying process. This option allows consumers to reduce their monthly payment amounts and lower their interest rates by combining their high-interest unsecured debt into a single account managed by a nonprofit credit counseling agency. Instead of paying each creditor, you’ll give one monthly payment amount to a credit counseling agency which will, in turn, pay your creditors. This option generally results in a 3-5 year repayment term of the combined debts.
Idaho Bankruptcy
After exploring different debt-relief alternatives, you may find you have little or no money left over to pay your creditors after you pay your monthly living expenses. If this is your financial situation, then you may decide your best debt relief option is to pursue Idaho Chapter 7 bankruptcy. You may want to begin learning about the bankruptcy process by scheduling a free consultation with an Idaho bankruptcy lawyer in your area. You can take advantage of this opportunity even if you can’t afford a lawyer’s help when filing. If you hope to save money by filing on your own, Upsolve may be able to help.
