How to Settle Your Debts in New Jersey

Collect the Details About Your Debts 

Before meeting with a credit counselor, approaching a debt settlement company, or attempting to negotiate with creditors on your own, it is in your best interest to be fully prepared. To get ready for managing your debt, there is certain information you should gather, including statements from your bank accounts, credit card companies, and other creditors. These statements will provide most of the information you need, including types of debt, amount of debt, current minimum monthly payments, interest rates, and outstanding balances,. The only other documentation you should need right away is a free copy of your credit report, which will include creditor information and will likely list all of your outstanding debts. Your credit counselor will use this information to help formulate a plan of action that you can choose to follow, if you wish. 

Collect Details About Your Ability to Settle Your Debts

Especially if you don’t have immediate access to funds that will allow you to pay your settlement offers, you’ll need to determine your disposable income before you can accurately determine whether debt settlement is a good option for you. Disposable income is the amount of money you have left after paying your monthly expenses. Whether you enter into a debt management plan, debt settlement plan, or decide to file for bankruptcy, your income and expenses will factor heavily in determining if you are a good candidate for these programs. Why? Because if you can’t save up money quickly to fund settlement offers (or pay your creditors monthly via a debt consolidation loan or debt management plan), this may be a sign that bankruptcy is your best option at this time.

If, however, debt settlement seems like a good fit for your situation, there are certain steps you can take to make the process work for you as efficiently, and quickly, as possible. Some useful tips include: 

• Do not include credit cards with small balances in your settlement; after accounting for debt settlement fees, it will cost you less to pay them off separately. 

• Resist the temptation to use retirement funds to cover debt settlement payments. The IRS penalties can wreak havoc; tax consequences and fees you pay for early withdrawal, and the fact that you can seriously damage your future by draining your retirement funds, make this a terrible idea. 

If you don’t have enough disposable income available, Chapter 7 bankruptcy may be your best option.

Learn About the Costs to Settle Your Debts in New Jersey

Financial problems are expensive. It’s sad and unfair, but it’s true. The moment you fall behind on payments, late fees and other penalties begin to accrue, making it even harder to remain current. Once you get to the point of considering debt settlement, these fees could account for thousands of dollars of your debt. If you choose to work with a New Jersey debt settlement company, you will have to pay fees for their services as well. Debt settlement companies usually charge either a percentage of total debt, or a percentage of total savings. Opt to work with a company that charges based on the savings they obtain for you, as this approach provides the company an incentive to make a great deal on your behalf. Debt settlement is an unquestionably costly process, but oftentimes, it is simply the best option available for an individual consumer. 

Decide Whether to Work with a New Jersey Debt Settlement Company

Although anyone can settle their debts on their own, not everyone should. To determine whether you should negotiate directly with creditors or work with a debt settlement company, ask yourself the following questions. If you answer yes to all of them, self-directed debt settlement might be a good option for you:

• Do I feel comfortable communicating and negotiating with creditors on my own? 

• Do I have enough time to devote to connecting with my creditors repeatedly?

• Do I have a minimal number of delinquent accounts? 

• Have I met with a credit counselor to go over different debt relief options? 

• Do I have a good understanding of my financial situation? 

The main benefits of settling on your own are cost savings and the ability to remain in control throughout the process. That being said, if you are intimidated by negotiating with creditors, working with a debt settlement company may save you in the long run. Reputable companies can handle the “heavy lifting” on your behalf and understand how to get you the best possible deals. 

Research New Jersey Debt Settlement Companies

If you decide to work with a New Jersey debt settlement company, it is important to research the company’s reputation before entering into any type of agreement. While most debt settlement companies are reputable, there are scams out there, too. And even a company that is not an outright scam may have a history of consumer complaints. Fortunately, a simple internet search for complaints is quick, easy, and free. Visit the websites for the New Jersey Attorney General and the Better Business Bureau to see if any consumer complaints have been registered regarding the company you are considering working with. 

How to Make Your Debt Settlement Work

Once you have decided whether to work with a debt settlement company or handle creditor negotiations on your own, it is time to take steps to ensure that your debt settlement arrangement works for you. You can either settle with an upfront, lump sum payment, or by creating a monthly payment schedule. If the latter, avoid setting up a payment schedule that you won’t be able to stick to. 

Step one is to calculate the amount of income you have left once you have paid your monthly expenses, both fixed and variable. Fixed expenses are costs that remain fairly stagnant from month to month, such as rent or mortgage, and auto loan payments. Variable expenses, on the other hand, can vary widely from month to month. These include groceries, entertainment, gas, and medical bills. The amount of money that remains after all these expenses have been paid is referred to as disposable income. 

After you calculate disposable income, determine how much of it can be used for monthly debt settlement payments. And choose a due date that makes sense for you. If your mortgage and car payment are due at the beginning of the month, it may be wise to choose a debt settlement due date around the middle of the month. Debt settlement works for thousands of Americans every year; don’t set yourself up for failure before you even get started.

Alternatives to Debt Settlement

You may decide that debt settlement is not right for you. This doesn’t mean you are out of luck. Multiple debt relief solutions exist for individuals who are overwhelmed by debt they cannot afford to pay. Each of these potential solutions has advantages and disadvantages, depending on your unique circumstances. As such, it’s very important to meet with a credit counselor and take advantage of a free counseling session before deciding on a particular type of debt relief program, including any of those listed below.