How to Settle Your Debts in New Hampshire

Collect the Details About Your Debts 

The first thing that you'll need to do to accurately determine whether debt settlement may be right for you is to gather details about each of your debts. This will include the amount of debt, your current interest rates, and minimum payments. Usually, you can find all of this information in your most recent statements from credit card companies and other creditors. You’ll want to find the information for all of your debts, including those you don't expect to settle, like secured debts and student loans, so that you can give your credit counselor and your creditors a complete financial picture. It’s also a good idea at this point to get a free copy of your credit report. It’s not at all unusual for creditors to assign or sell delinquent accounts to collection agencies or other debt collectors, often more than once. Having your credit report on hand makes it easy to approach the current holder of your debt when you're making your settlement offers. 

Collect Details About Your Ability to Settle Your Debts

Next, and equally important, you’ll need to collect details about your ability to afford settling your debts. You’ll need to determine what your monthly income (take-home pay and any other money that you receive regularly) looks like for an average month. If your only income is from Social Security, please note that this income is protected from creditors. If you're working, you should look at your most recent paycheck stubs, although make sure that these documents represent “typical” work weeks. If you’ve had a lot of overtime lately, you don’t want to base a potential payment plan on an artificially inflated income that you can’t sustain. 

When evaluating your budget, you should include any regular monthly expenses and an average amount for variable expenses like groceries. The amount of money that you have left at the end of the month after accounting for your budget items is the amount that you can set aside to save for settlement offers. If your living expenses exceed your income then Chapter 7 bankruptcy may be a better option for you to get out of debt. You should never raid any retirement accounts to cover your lump sum offers. There are penalties and tax consequences for early withdrawal and you risk not having enough in your accounts for when you do retire. 

Learn About the Costs to Settle Your Debts in New Hampshire 

Any time you enter into debt settlements, you incur costs. Even if you don't work with a New Hampshire debt settlement company, you’ll incur late fees and other penalties for late or non-payment before you can qualify for debt settlement, as creditors won’t accept debt settlement offers from someone whose account is current. If you do choose to hire a New Hampshire debt settlement company, you’ll also incur fees for their service, and if they require an escrow account to build up your savings, you’ll be responsible for any fees associated with that bank account. The service fees are usually based on a percentage, which on the expensive side could be a percentage of your total debt. It's better to go with a New Hampshire debt settlement company that charges you a percentage of your total savings, as that's cheaper for you and incentivizes the company to negotiate favorable debt settlement terms on your behalf. A reputable New Hampshire debt settlement company will collect their fees over time, charging you a portion of their fees as each debt is settled. If a debt settlement company tries to collect their fees before they complete any settlement agreements, treat that as a huge red flag and don’t sign up for their services.

Decide Whether to Work with a New Hampshire Debt Settlement Company

Working with a reputable New Hampshire debt settlement company can be very helpful during the debt settlement process. With their insider knowledge and established creditor relationships, reputable companies can fairly accurately predict what lump sum amounts will be accepted as settlements. That being said, you don't need to work with any debt settlement company if you don’t want to. Anyone can move forward on their own, although a DIY approach is probably most likely to be successful if you're organized, computer savvy, not afraid to negotiate and able to keep track of all the facts and figures involved. This approach has benefits beyond saving the money you’d otherwise have to pay in service fees to a debt settlement company. Moving forward on your own allows you to be in complete control of the process, and gives you an opportunity to settle with creditors who have a policy of not working with any New Hampshire debt settlement companies. Keep in mind, however, that this process can easily get overwhelming when you’re trying to navigate it on top of your regular obligations. Both approaches have benefits and drawbacks, so make sure to do whatever makes the most sense for your situation. 

Research New Hampshire Debt Settlement Companies

For all the good reasons why you may want to hire a New Hampshire debt settlement company, it can also be nerve-wracking to know that there are many scams out there. You’ll want to do some research before committing to working with any particular company so that you can ultimately feel confident about your choice. First, know that any reputable New Hampshire debt settlement company must share with you, before you sign up, information about their program. This will include the price and terms, estimates for the timing of results and amount required to fund settlement offers, as well as possible negative consequences you may face if their program involves stopping payments to your creditors. 

There are also several red flags that you can look out for to avoid scams and predatory companies. If a New Hampshire debt settlement company offers guarantees for results, that's a red flag. Remember, no creditor is obligated to agree to debt settlements. Additionally, if they are hyping a “new government program” that can be suspicious. It can also be a red flag if the New Hampshire debt settlement company advises you to stop making payments and stop communicating with creditors before you have an actual plan in place. And if any debt settlement company tries to charge their fees before any settlements are accepted, you should look elsewhere. 

You can check out the New Hampshire attorney general’s office (and particularly its consumer protection bureau) to see whether there have been complaints filed against a company you're considering or potential scams going on in your area. You can also check with the Better Business Bureau to see if there is a history of complaints against the company you’re researching and to check a New Hampshire debt settlement company’s overall rating. 

How to Make Your Debt Settlement Work

Consider following some best practices to help make your debt settlement as successful as it can be. If your debt settlement process involves a payment plan, make certain that your monthly payment date is not set to the same date as any other large monthly payments (i.e. avoiding the first of the month). You should also build in an emergency fund, where you're setting aside some money each month in case something unexpected comes up. You can always contribute extra money into your savings if you come into a lump sum like an income tax refund, but make certain that you first replenish or build up your emergency fund first. Why does budgeting and building an emergency fund matter to the debt settlement process? If you’re paying in installments, you’ll want to make sure you have enough income available to cover each payment. Additionally, successful debt settlement helps place you on the road to becoming debt free. Failing to think ahead now will likely land you in financial crisis again in the future. 

Alternatives to Debt Settlement

If you find that debt settlement is not the best debt management system for you, be sure to check out some other alternatives to help you reach your financial goals. Consider this short overview of some of the most common alternatives to debt settlements, including debt consolidation, debt management plans, and filing for bankruptcy.