How to Settle Your Debts in Indiana

Collect the Details About Your Debts 

To become debt-free, you must first gather as much information as you can about all of your debts. A great place to start involves pulling a free copy of your credit report from each of the credit bureaus (e.g. Experian, Equifax, and TransUnion). Your credit report will provide you with a list of creditors, payment history and any closed accounts. You’ll also want to review your most recent account statements to confirm the interest rates you are currently paying (in addition to your monthly payments and balances owed). You need to examine all of this information for two primary reasons. First, you’ll need to decide if any of your debts is a good candidate for settlement. Second, you’ll want to provide your credit counselor with a complete financial picture of your current circumstances. Your credit counselor can’t provide you with accurate and effective personalized guidance unless they understand your financial situation in full. 

Collect Details About Your Ability to Settle Your Debts

Keeping track of your income and living expenses in a budget each month is very important. You can’t know if you can afford to fund debt settlements if you don’t know (in detail) how much you earn, how much you spend, and how much you owe. You can likely determine your monthly income by looking at your two most recent paycheck stubs. You’ll then want to account for all of your monthly expenses. Include both fixed expenses (like your mortgage or rent) that stay the same every month and unfixed expenses (like groceries and gas) that don’t. If there is little or no money left over to pay creditors after you’ve paid your expenses, debt settlement is probably not your best option. The exception to this “rule” involves debt settlements funded by one-time influxes of cash from the sale of property, inheritances, bonuses, etc. If you can fund a lump sum settlement immediately and you don’t have to rely on several monthly payments, debt settlement may still be a reasonable option for you. 

Learn About the Costs to Settle Your Debts in Indiana

If you are thinking about working with a debt settlement company, know that their services are not free. Do your homework to learn about what an Indiana debt settlement company can legally charge for their debt negotiation services. You’ll pay for their service of negotiating and working out a payment plan for you to pay less than the full amount you owe. You’ll also pay for them to negotiate with your creditors to eliminate any late fees or other charges you incur when you stop paying on your accounts. Sometimes, a company may charge an initial set up fee, which many states have capped at $50. Many companies charge a maintenance fee for each debt you hope to settle. An Indiana debt settlement company may also charge around 15% of the amount of the total debt you originally owed or 15% of the total amount you saved by entering a settlement agreement. These fees can add up quickly, so make sure to ask any questions you may have about a company’s fee structure before you agree to work with them. 

Decide Whether to Work with an Indiana Debt Settlement Company

If paying fees for the debt settlement process has you thinking of settling your debts by yourself, there are some things to consider. One is the amount of time and effort it will take on your part to contact all your creditors to negotiate a settlement with each of them. Another factor to consider is your lack of knowledge and experience, even if you have good computer skills and don’t mind negotiating with your creditors directly. You will be at a disadvantage compared to an Indiana debt settlement company that has knowledge and experience in what terms creditors typically accept or don’t accept when settling debts. Also, you won’t have anyone to talk to if you run into issues going it alone. With that said, avoiding fees is a powerful motivator to put your best foot forward. There is no one “right” approach to debt settlement. Do whatever makes the most sense for your unique situation. 

Research Indiana Debt Settlement Companies

You’ll want to do what you can to avoid scams when you seek help from an Indiana debt settlement company. If a company makes guarantees, that’s a red flag. If they tell you to stop talking to your creditors without explaining the risks of this approach, be concerned. Another red flag to look for is a phrase like “new government programs” as there usually aren’t any when it comes to debt settlement.  

Once you find a few companies you’re interested in working with, look them up to see if other consumers have filed any complaints against them. You can do this by checking with the Better Business Bureau or the Indiana consumer protection division in the attorney general’s office for company complaint history. A trustworthy company will explain any conditions on its services upfront. Also, a reputable company will not charge you service fees before they settle your debts. Keeping you informed about your debt settlement process on an ongoing basis is also how a trustworthy company operates.  

How to Make Your Debt Settlement Work

The goal of any debt settlement agreement is to make your payments successfully so that you don’t default on your plan and end up in a worse financial position than the one you started in. If you’re not in a position to make a lump sum offer immediately (because you have access to enough income or property you can sell to fund your offer), you’ll likely need to work with a debt settlement company to build your escrow account over 2-3 months until you can fund an acceptable offer. Think about when to schedule your monthly payments and how to plan for emergencies so you don’t miss a payment. Avoid having your debt settlement payments debit on the first of the month when your payments for rent or mortgage are also due. 

Be mindful of planning for emergencies like car repairs, as you don’t want an unexpected expense to derail your plan. Perhaps you have a savings account for taking care of emergencies. If not, you might do this by keeping one or more credit cards out of your debt settlement. If you have to use a credit card, it will be helpful to set up a payment plan to wipe out this new debt for the emergency as soon as possible. Trying to use a credit card while going through a debt settlement can be tricky. A bank where you have more than one credit card may actually close the card with the lower balance that you are trying to keep. A creditor might reduce the credit limit on the cards. Discuss all of this if you are working with an Indiana debt settlement company so you have a plan for dealing with any emergencies that may arise during your debt settlement.   

Alternatives to Debt Settlement

If your debt settlement process is unsuccessful because your creditors won’t settle or you default on your payments, you can get sued in court and your creditors may be ultimately allowed to garnish your wages. If you’re unwilling to take this risk or you simply don’t have enough income to fund settlement offers quickly, you may want to consider some debt management and debt relief alternatives. If any of the alternative options listed below are intriguing to you, make sure to discuss them with your credit counselor.