How to Settle Your Debts in Mississippi
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After determining whether you’re a good candidate for debt settlement, you’ll need to decide whether you want to work with a Mississippi debt settlement company or negotiate with creditors on your own. The following information will provide further insight into the debt settlement process, and how to begin getting yourself out of debt today, regardless of whether you ultimately choose to settle your debts or manage them in an alternative way.
Written by Upsolve Team.
Updated May 21, 2020
There are multiple debt relief options available for Americans who have outstanding balances they cannot afford to pay. However, no single solution is the “right choice” for every situation. As a result, if you are struggling with debt, it’s important to learn about the options that are available to you so that you can make an informed choice about which debt management solution is ideal for your circumstances.
For example, debt settlement is an arrangement through which you make either an upfront, lump sum payment or a few monthly payments to resolve a debt for less than what you actually owe. You are likely a good candidate for a settlement plan if you have enough money to pay the settlement amount, your accounts are already behind, your credit score is already damaged, and continuing to try to pay the remainder of the debt over time would be a hardship.
Creditors won’t accept your settlement offer if you are current or only a month behind. There is no incentive to settle unless the only alternative is not getting paid. Creditors know that only one out of five accounts that are 91+ days past due will ever be paid. Getting something is better than getting nothing, and the debt settlement process dramatically improves the creditor’s chance of recovering some of what is owed to them. This is why creditors of unsecured debt tend to be willing to work with account holders to settle debts that are more than 90 days past due. Secured creditors, by contrast, usually refuse to settle because they can simply repossess their property when a debtor defaults on their payment agreement.
It is possible to enter into debt negotiations with credit card companies and other creditors on your own. If you are comfortable negotiating with creditors and you only have a few to deal with, settling on your own may be a cost-effective alternative to working with a debt settlement company. However, there are many benefits to working with a Mississippi debt settlement company, including the fact that when you outsource this process to a company, you don’t have to deal with your creditors directly any more. It is the job of a debt settlement company to negotiate with the creditors on your behalf. In addition to avoiding uncomfortable conversations, a reputable debt settlement company can also ensure that the creditor accepts a reasonable settlement offer amount. Debt settlement scams absolutely do exist, but if you do your homework, you can find a reputable company and an advisor who really wants to help you get your financial life back on track.
Learn More Through Free Nonprofit Credit Counseling
If you are struggling to pay your debts and are unsure about which debt management strategy is the best one for your situation, you can benefit from scheduling a free credit counseling session with an accredited, nonprofit credit counseling agency. Most people walk away from a credit counseling session with a much better understanding of their personal finance situation and how to effectively reduce their total amount of debt, work toward improving their financial future, stop or slow the accrual of late fees, and finally put an end to the incessant collection calls. There is no risk or obligation associated with this process and no eligibility requirements. If you’re interested in learning more about the debt management and debt relief options available to you, connect with a credit counselor today at an accredited, nonprofit credit counseling agency today. You’ll leave your session with a personalized action plan tailored uniquely to your circumstances.
How to Settle Your Debts in Mississippi
After determining whether you’re a good candidate for debt settlement, you’ll need to decide whether you want to work with a Mississippi debt settlement company or negotiate with creditors on your own. The following information will provide further insight into the debt settlement process, and how to begin getting yourself out of debt today, regardless of whether you ultimately choose to settle your debts or manage them in an alternative way.
- Collect the Details About Your Debts
- Collect Details About Your Ability to Settle Your Debts
- Learn About the Costs to Settle Your Debts in Mississippi
- Decide Whether to Work with a Mississippi Debt Settlement Company
- Research Mississippi Debt Settlement Companies
- How to Make Your Debt Settlement Work
- Alternatives to Debt Settlement
Collect the Details About Your Debts
If you are going to meet with a credit counselor, it is in your best interest to gather as much information as possible about your debts beforehand, including those you are not planning to settle. This will provide the counselor with the clearest picture of your financial situation. Statements from creditors provide much of the information you need, including interest rates, monthly payment minimums, current balances owed.
Obtaining a free copy of your credit report is also a good idea, as the credit report will provide updated information about your creditors and your overall debt load. It is very common for creditors to sell loans in default to other creditors. If you decide to settle your debts, you don’t want to waste time reaching out to the wrong creditors. Your credit report will let you know who currently “owns” any of your debts that are in default.
Collect Details About Your Ability to Settle Your Debts
Whether you decide to enter into a debt settlement arrangement, enroll in a debt management plan, or file for bankruptcy, you will need to determine your income relative to your expenses. This is important because you need to know whether you have income leftover every month that can be used to fund settlement offers or otherwise manage your debt. If you don’t have a lump sum of income available or assets you can sell, you’ll only be able to fund your settlement offers by saving up money over a 2-3 month period. By examining your income and expenses, you’ll be better able to tell whether you can successfully pursue debt settlement or you need to look at debt management alternatives.
To determine income relative to expenses:
Gather paycheck stubs, ideally the two most recent paychecks you’ve received.
Ensure that these paychecks are a true representation of your average monthly income and are not inflated by overtime or excessively-low due to time off.
If your spouse is a co-signer on any of the loans in question, gather income information for your spouse as well.
Determine fixed costs, such as car insurance and monthly rent or mortgage.
Determine average variable costs, such as gas, groceries, and entertainment.
Subtract your total expenses from your total income and see how much disposable income remains. Do you have enough left over every month to fund a settlement offer if you save up for 2-3 months?
Learn About the Costs to Settle Your Debts in Mississippi
There is a cost to falling behind on debts. Regardless of how you choose to proceed, you will incur certain costs on your path to total debt relief if you choose to settle your debts. The longer your debts remain delinquent during settlement negotiations, the more costs and penalties will accrue. That being said, these costs should be relatively minimal and manageable moving forward if you do your homework and stick to your payment plan.
In addition to late fees on past due accounts, you will have to pay fees for working with a Mississippi debt settlement company, if you choose to go that route. Debt settlement companies typically charge fees based on a percentage of total debt, or a percentage of total savings. They may also charge a minimal fee for bank deposits placed into an escrow account.
These costs can be intimidating. But whatever you do, avoid taking early withdrawals from retirement accounts to pay your debts. In addition to IRS tax consequences, you can significantly jeopardize your future by draining these accounts too early. The benefits of paying your debts off now are simply not worth the consequences of dipping into your retirement funds.
Decide Whether to Work with a Mississippi Debt Settlement Company
The reality is, anyone who wants to can try to settle debts on their own. There is absolutely no requirement that you work with a debt settlement company. But no one-size-fits-all answer exists when it comes to deciding whether a DIY approach to debt settlement is the best option. If you feel up to the challenge of negotiating with creditors on your own, going it alone might be in your best interest. This option will likely save you money. On the other hand, if you have many creditors, you lead a busy life, and/or the thought of dealing with creditors on your own makes you uneasy, working with a reputable debt settlement company may be the best option. The pros and cons of doing it yourself include:
Pros:
No need to pay fees to a debt settlement company.
You remain in complete control the entire time.
You can negotiate with any creditors who refuse to work with debt settlement companies.
Cons:
Negotiating with creditors and formulating a plan can be extremely time consuming.
You lack the insider knowledge of how to negotiate with creditors that a debt settlement company is privy to.
Some things will have to be learned through trial and error, rather than having an advisor tell you how to do it right the first time.
Research Mississippi Debt Settlement Companies
As mentioned earlier, there are some shady debt settlement companies out there. To better ensure that you’re working with one of the good ones, it’s important to do your research before entering into any type of agreement. Debt settlement companies are required by law to provide you with extensive information about their plans and the negative consequences associated with debt settlement, such as the possibility of being sued and a lowered credit score. If a company promises you the moon and the stars and a consequence-free settlement process, they are probably scamming you and it’s best to turn elsewhere for assistance.
You can perform an online search for complaints concerning a specific debt settlement company on the Mississippi Attorney General’s website, or by visiting the website for the Better Business Bureau. By taking time to research any given company’s reputation now, you may save yourself a lot of time, trouble, stress, and money down the road.
How to Make Your Debt Settlement Work
Don’t set yourself up for failure before your debt settlement plan begins. Choose a monthly payment or lump sum that you can actually afford, and then propose this amount to your creditors or the debt settlement company. Also consider the designated due date for your payments. It may be unwise to schedule a monthly debt payment on the same date as your mortgage payment, for example. And if you can make extra payments to get your debt paid off sooner, by all means do so. Failure to create a plan that makes sense will destroy your chances at a successful debt settlement before the process even gets off the ground.
Alternatives to Debt Settlement
Debt settlement is a workable option for many people, but it is not the best solution for many individuals in need of relief. Thankfully, there are multiple options available to you, from debt consolidation loans to bankruptcy. This is one of the many reasons that completing a free credit counseling session is so useful; your credit counselor will provide invaluable insight into which of the many options might be right for you. Read on for more information about alternatives to debt settlement.
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Mississippi Debt Consolidation
For most low-income individuals who are overwhelmed by debt, a debt consolidation loan is not a viable option. These bank loans require good credit, and falling behind on payments usually results in a significantly-lowered credit score. If, however, you have a good credit score, are current on your loans but are struggling to make monthly payments, a Mississippi debt consolidation loan may be right for you. These loans take your existing unsecured debts and combine them into one account, usually with a lower interest rate and monthly payment. In addition to only having one creditor to pay each month, the lower payment may provide you with enough breathing room to stay on track.
Mississippi Debt Management Plan
Debt management plans allow you to create a payment schedule and monthly amount that works better for you than the schedule and minimum payment amounts currently enforced by your creditors. For people who are able to pay off their debts in full, but need a little help to make that happen, debt management plans may be the best option. To enroll in a Mississippi debt management plan, you’ll need to work with an accredited, nonprofit credit counseling agency. After the details of your DMP are worked out with your creditors, you’ll submit a single monthly payment to the agency. The agency will then distribute these funds to your multiple creditors per the terms of the plan. This option is available to you even if you have an unfavorable credit score.
Mississippi Bankruptcy
Bankruptcy is generally the last resort for most people who are struggling to make minimum payments on their debts, but in some cases, it is the only viable option. If you don’t have the ability to make any debt management alternatives work for you, take advantage of a free initial consultation offered by a bankruptcy attorney in your area.
For low-income individuals who wish to file bankruptcy but cannot afford legal counsel, Upsolve is here to help. We are a non-profit organization that assists low-income individuals who want to file Chapter 7 bankruptcy. If this sounds like you, visit our website for more information on filing Mississippi bankruptcy today.
