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How to Settle Your Debts in Nebraska

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In a Nutshell

Read on to learn more about how to settle your debts and about debt settlement alternatives. If after a credit counseling session, you determine that debt settlement is the best option for you, you’ll need to determine whether you want to negotiate with creditors directly and you’ll need to take steps to ensure the success of your debt settlement process. 

Written by Upsolve Team
Updated May 21, 2020

If you have debt that you cannot afford to make minimum monthly payments on, you probably feel stressed, overwhelmed, and uncertain of how to move forward. Rest assured that multiple debt relief options exist to help low-income individuals in this situation. Determining which of these options is best for you, however, requires a bit of homework on your part. It is important to weigh the pros and cons of each option before committing to a plan of action. 

For example, you may want to consider settling your debts at once instead of paying them off over time. Your situation may benefit from the debt settlement process if you have the ability to offer your unsecured creditor(s) a lump sump of money either immediately or after saving for 2-3 months. In a debt settlement arrangement, you agree to resolve your debts and close your accounts for less than what you owe. A Nebraska debt settlement company can assist you with this process, but you can also negotiate with creditors directly. 

Unsecured creditors know that people who are more than 90 days past due on accounts are unlikely to ever pay off their debt. As such, they are often willing to accept lesser amounts through debt settlement. With that said, all debts are not created equal, and certain creditors are more willing to accept settlements than others. Types of debt for which debt settlement is common include: 

  • Credit cards issued by a bank

  • Credit cards issued by a retailer

  • Signature loans

  • Gas cards

  • Balances remaining after a vehicle repossession

  • Third party collection accounts

In general, you should focus only on unsecured debts, such as those listed above, for inclusion in a debt settlement plan. Settling secured debts, such as a car loan, doesn’t usually go over well with creditors, because they prefer to exercise their right of repossessing collateral in the event of debtor default. If you want to keep your car or other secured property, you really need to remain current on your payments or risk having your assets repossessed. 

If/when you determine that your debt is a good fit for settlement, you must consider whether you are a good candidate for this process. If you are struggling to make payments but are current on your accounts, you are likely not a good candidate for a debt settlement plan. Your creditors have no incentive to accept a settlement offer for less than what is owed to them while you are making monthly payments. Generally, you need to be more than 90 days past due on an account to make debt settlement offers. If you’re current on your accounts but struggling to make your monthly debt payments, read the section on free credit counseling below and consider asking a credit counselor whether a debt management plan might be right for you.

Additionally, if you’re considering debt settlement, you should have enough money to pay at least part of your outstanding balance, but not enough to pay the full amount. Debt settlement is usually accomplished by paying one, lump sum payment or a few smaller, monthly payments. Once you have agreed upon an amount, with a Nebraska debt settlement company or directly with your creditors, it is important to stick to whatever payment schedule has been arranged or you could end up in a far worse position than you were in when you started exploring debt settlement as an option. 

Learn More Through Free Nonprofit Credit Counseling

Nonprofit, accredited credit counseling agencies offer free credit counseling to anyone interested in learning more about the debt management and debt relief options available to the public. You don’t need to meet any eligibility criteria to schedule a free credit counseling session; you simply need to connect with a nonprofit, accredited credit counseling agency and make an appointment. 

Credit counseling is a highly-recommended first step on the path to debt relief. Credit counselors, who are trained in money management, use these sessions to perform thorough analysis of individuals’ personal finances. When you meet with a credit counselor, they will give you advice on how to move forward and work with you to create short and long-term financial goals. Finally, your credit counselor will help you determine which type of debt relief option is best for you, if any. You will leave your credit counseling session with an action plan and a better understanding of your overall financial picture. It is entirely up to you whether you follow the counselor’s advice, and it won’t cost you a dime. 

How to Settle Your Debts in Nebraska

Read on to learn more about how to settle your debts and about debt settlement alternatives. If after a credit counseling session, you determine that debt settlement is the best option for you, you’ll need to determine whether you want to negotiate with creditors directly and you’ll need to take steps to ensure the success of your debt settlement process. 

Collect the Details About Your Debts 

Ensure that you can get the most out of your meeting with a credit counselor by gathering necessary information prior to the meeting. Your counselor’s advice and recommendations will be based on the information you provide, so make sure you come prepared. Essential items include bank, credit card, and loan statements, which detail monthly payments, interest rates, outstanding balances, past due amounts, etc. Also obtain a free copy of your credit report, which will provide your updated creditor information. You can’t receive authoritative guidance regarding which debts may be good candidates for settlement unless you give your credit counselor a clear picture of your overall financial situation. 

Collect Details About Your Ability to Settle Your Debts

Your credit counselor will also be better empowered to provide you with personalized guidance if you allow them access to monthly budget information. You’ll need to determine your monthly income and write down all of your regular fixed and unfixed expenses. You should also write up notes on expenses that occur regularly but not monthly, like annual car registration. 

Once you have calculated your monthly income, determine how much is left over after accounting for your regular expenses. This is called your disposable income. If there is very little income—or no income at all—remaining once you have paid your monthly living expenses, debt settlement is probably not a good option unless you already have access to a lump sum of money or property you can sell to fund your settlement offers. Absent these assets, your disposable income is what you have available to offer your creditors over time.

Avoid using retirement funds to settle debts. In addition to the IRS tax consequences and fees you will incur to pull money out of your retirement account, you can do serious damage to your future living situation by draining your retirement assets too early. If you simply don’t have enough disposable income to settle your debts (or to streamline them effectively via a debt management plan), filing for bankruptcy may be the best option for you. 

Learn About the Costs to Settle Your Debts in Nebraska 

Falling behind on debt payments isn’t cheap. In addition to the late fees and penalties you will incur on past due accounts, your creditors may choose to take legal action against you if you default on your payment schedule. It is for this reason that if you aren’t yet behind on your accounts, it isn’t a good idea to start simply to become eligible for a debt settlement. No creditor is obligated to accept a settlement offer and the money that defaulting will cost you is significant. Also, the longer your debts remain unsettled, the more these kinds of costs will accrue.

If you do choose to try and settle overdue accounts, you will need to pay fees to a Nebraska debt settlement company if you don’t negotiate with your creditors directly. These companies typically charge one of two ways—a percentage of the full amount of your debt, or a percentage of total savings. The latter option is a better one, as it gives the debt settlement company an incentive to get you a better deal. 

Decide Whether to Work with a Nebraska Debt Settlement Company

You can absolutely settle your debts on your own, but not everyone wants to. And not everyone is in a good position to do so. If you are a good communicator, unafraid to negotiate directly with creditors, and you have only a few delinquent accounts, self-directed debt settlement might be a good option. You will save money and remain in control throughout the entire process. 

However, if you’re a busy person, you don’t want to handle the details of direct negotiation, and/or the thought of debt negotiations with credit card companies makes you want to run and hide, working with a debt settlement company is likely a better option for you. Reputable debt settlement companies have insider knowledge about how to get creditors to accept the lowest settlement possible and can save you from having to speak with aggressive creditors. 

Research Nebraska Debt Settlement Companies

If you don’t want to negotiate with your creditors directly, do your homework. There are many reputable debt settlement companies out there, but there are also plenty of scams. Before entering into any arrangement with a Nebraska debt settlement company, visit the Nebraska Attorney General’s website and the Better Business Bureau website to see if there have been any complaints filed specific to that company. A few complaints shouldn’t raise a red flag. But if the complaint list is long or the complaints detail unacceptable business practices, look elsewhere for help. Your credit counselor may be able to suggest a reputable company worthy of your business.

How to Make Your Debt Settlement Work

Choosing to enter into a debt settlement arrangement means that you are serious about getting out of debt and improving your financial future. Don’t set yourself up to fail before you even get started by choosing a monthly payment or upfront, lump sum payment that you can’t afford. Once you have calculated the total amount of disposable income you have left after your monthly bills and expenses are paid, determine how much can be designated for debt settlement payments. 

The due date you choose is also very important. If your mortgage is due on the 1st and your car payment on the 10th, for example, you might want to pick a due date of the 20th for your debt settlement payments. Stick to your scheduled payment date, and make extra payments if you can. Doing so will help you get your full debt amount paid down sooner. 

Alternatives to Debt Settlement

If after reviewing this guide and/or meeting with a credit counselor you have determined that debt settlement isn’t right for you, it is very possible that another form of debt relief will be more suited to your needs. Each of the alternatives to debt settlement outlined below have advantages and disadvantages, depending on your unique situation and goals. This is why it is so important to meet with a credit counselor before embarking on any path to debt relief. Debt settlement works for many people, but it’s far from the only debt relief option available. Read on for more information about different forms of debt relief, and the pros and cons of each. 

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Nebraska Debt Consolidation

By the time most people are overwhelmed by debt, their credit score has dropped substantially due to missed payments. A low credit score and low income prevents many people struggling with credit card debt from taking out a debt consolidation loan. If, however, you haven’t begun missing payments yet and your credit score remains excellent, a debt consolidation loan may be an option for you. A Nebraska debt consolidation loan combines multiple loans into one account. Instead of paying three, four, or more creditors, you will pay just one, and the combined payment is usually a significant cost savings. Just make sure that the loan you take out to pay off your existing debts has favorable rates. 

Nebraska Debt Management Plan

A Nebraska debt management plan is not a loan and therefore does not require good credit. This approach also doesn’t require you to have lump sums available upfront. Instead, a debt management plan allows you to work with an accredited, nonprofit credit counseling agency to construct a payment schedule and monthly payment amount that works better for you than the schedule and amounts currently set by your creditors.

Essentially, your credit counselor will streamline your unsecured debts into a single account. You’ll then make one payment monthly to the agency, which will then distribute the payment to your creditors per the terms of your DMP. In constructing your DMP, your creditor counselor may be able to lower your interest rates and get your creditors to waive certain fees and penalties. If you have enough income each month to pay some of your debt off, this may be an excellent option for you. 

Nebraska Bankruptcy

With a solid plan in place for getting your finances back on track,filing for bankruptcy can be exactly what you need to clean your slate and begin rebuilding your credit, savings, and retirement. If you simply don’t have the funds to pay your debts, you may benefit immensely from filing for bankruptcy. 

Bankruptcy lawyers typically offer a free initial consultation, during which you can ask questions, present a comprehensive overview of your financial picture, and determine whether bankruptcy is right for you. With that said, if you don’t earn much income and can’t afford to hire an attorney, Upsolve may be able to help. We are a non-profit that assists eligible individuals in filing for Chapter 7 bankruptcy for free. If you are considering this form of debt relief, visit our website today for more information on Nebraska bankruptcy.

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