How to Settle Your Debts in Rhode Island

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Written by Upsolve Team.  
Updated March 19, 2020

Summary

This guide will provide you with valuable information about the debt settlement process and about how to choose a reputable Rhode Island debt settlement company. It also contains an introduction into other debt-relief options that are available to you in the event that debt settlement isn’t a good fit for you or isn’t the only option you should be taking advantage of right now.

If you’ve been feeling like your debt is starting to become overwhelming, it may be time to start considering the debt management and debt relief options that are available to you. Depending on your unique circumstances, any number of solutions may be able to help you get back on the right track financially. Especially if you’re already behind on your bills and your credit score is suffering as a result, seeking a good debt relief program to help you through this time is vital. 

When you are already behind on your bills, late fees and interest accrue. Moreover, you may be contacted repeatedly by collection agencies and other kinds of debt collectors, which is a stressful situation to navigate. If this situation sounds all too familiar, you may want to consider debt consolidation, a debt management plan, bankruptcy, and/or debt settlement to manage some or all of your debts. The debt settlement process reduces the total amount you owe your creditors because it allows you to achieve partial debt forgiveness in exchange for a lump sum payment on your total amount due. This process works especially well for unsecured debt. By pursuing debt settlement, you can potentially settle your unsecured debt for pennies on the dollar. You (or a debt settlement company) and your creditors will work together to set up different payment arrangements to complete your debt settlement plan. You may be able to either make a one-time lump sum payment or make payments in installments over 2-3 months’ time. Creditors like to get lump-sum payments because it lessens the risk that you will fall behind on your commitments and they won’t get paid anything. 

Before signing up with a Rhode Island debt settlement company, you must be careful to avoid scams. There are many honest companies in operation that can help you eliminate your debt but there are also many fraudulent companies out there as well. Know that if you don’t want to hire a debt settlement company to help you, you can negotiate with creditors on your own. If you decide that you want to negotiate your debts without the assistance of a Rhode Island debt settlement company, know that negotiations can be very time consuming and a bit stressful, but by staying organized and taking your time, you can save the money you would have paid a debt settlement company to help you. 

Learn More Through Free Nonprofit Credit Counseling 

Nonprofit, accredited credit counseling agencies provide resources and tools to anyone struggling with debt and/or interested in learning more about gaining greater control over their finances. There are many free non profit credit counseling agencies that can help you determine which debt management tools are right for your situation. A credit counselor can help you understand each debt relief option and give you insight on which one seems like the best fit for your unique circumstances. You can speak with a certified credit counselor for free by calling a nonprofit, accredited credit counseling agency in your area and scheduling a free credit counseling session at any time. A free meeting with a credit counseling agency is a great way to begin researching the best debt relief options available to you, including debt settlement. 

You can visit the NFCC to find the most reputable credit counseling agencies operating in your area. While there are no debt settlement companies that are accredited, credit counselors can give you a lot of insightful information about which debt settlement companies operating near you may be worth reaching out to. 

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How to Settle Your Debts in Rhode Island  

This guide will provide you with valuable information about the debt settlement process and about how to choose a reputable Rhode Island debt settlement company. It also contains an introduction into other debt-relief options that are available to you in the event that debt settlement isn’t a good fit for you or isn’t the only option you should be taking advantage of right now.


Collect Details About Your Debts 

The first step to ensuring a smooth debt settlement process is to collect information about all of your debts. You will want to know how much your minimum payments are, what your interest rate is and how much the total amount you owe is. You should take time to look over information about the debts you aren’t going to include in the debt settlement process (as well as those that you hope to settle) so that you have a full financial picture of your debts. You will want to show the debt settlement company that you really can’t afford your bills. Giving them a full and accurate financial picture of the debts you owe is a good negotiation tool. As an added bonus, pulling this information together will also help you to give your credit counselor the insight they need to create a truly personalized action plan on your behalf. 

To ensure that you have the most current information available about your debt load, you’ll want to pull a free credit report from one or more of the three major credit bureaus. A credit report will give you a complete list of your debts so that you know how much you owe and to whom. Be aware that some of your accounts may have been sold off so you may not see your original creditors listed. On the credit report, you will likely find information about your current balance, interest rate, and monthly payment amount. 

Collect Details About Your Ability to Settle Your Debts 

To complete a Rhode Island debt settlement plan, you will need to obtain funds to offer a lump sum or very short-term installment plan. You will need to determine how much income you have available to offer your creditors after your monthly expenses are paid, if you don’t already have funds available and you’re not planning on selling property to fund your settlement offers. 

First, calculate how much income you’ll have coming in (reliably) over the next few months. Next, you will want to make a list of all of your monthly expenses. You will want to differentiate between fixed expenses and variable expenses. Fixed expenses are bills that are always the same: student loan payments, cable, internet, and car insurance, etc. Variable expenses, on the other hand, change each month. Some examples of variable expenses are groceries and gas. To get an accurate estimate of how much you spend on variable expenses each month, you should take the last six months of variable expenses and get an average. 

Once you have an accurate picture of how much your expenses are and how much you make. you will be able to determine how much disposable income you have left over on a regular basis to offer to your creditors. If your total disposable income is less than your expenses, you may want to look into filing bankruptcy instead. 

Learn About the Costs to Settle Your Debts in Rhode Island  

A Rhode Island debt settlement company can charge fees for its services but cannot charge any fees before it has settled or otherwise resolved your debts. A Rhode Island debt settlement company’s fees can be up to 20% of the debt. They can also be based on a percentage of total debt. Some companies charge based on the savings that their debt settlement program will provide to consumers, which is ideal as it provides an incentive to get you an excellent settlement offer. 

If you decide to work with a debt settlement company, you will probably be required to make monthly payments into an escrow account. The debt settlement company you work with will then use those funds to pay your negotiated settlements. As you continue to build up your settlement account, you may be going deeper into debt. Many debt settlement companies will tell you to stop paying your creditors while you are in a debt settlement plan to maintain your eligibility for the debt settlement process. This can cause extreme damage to your credit score and irreversible late fees and penalties on your accounts. However, most creditors won’t even work with you until your debts are past due because they will only accept settlements if they believe you won’t be able to pay them back. If you have a good credit score, then you may want to look into other debt-relief options instead because the debt settlement process is going to inevitably cause some damage. 

Decide Whether to Work with an Rhode Island Debt Settlement Company 

A Rhode Island debt settlement company can help you get back on a straight financial path. They can negotiate settlements for you and relieve stress from having debt collectors call you repeatedly. However, if you don’t think that hiring a debt settlement company to help you is necessary, you can save money by conducting debt settlement negotiations yourself. If you decide to take this task on, make sure you stay organized. You will spend a lot of time on the phone going back and forth with different people so making sure you have good notes is vital. On average, you may go back and forth three or four times with one creditor before reaching any type of settlement agreement. Ultimately, the choice to work with a debt settlement company or to take this process on yourself is up to you. 

Research Rhode Island  Debt Settlement Companies

If you are thinking of hiring a debt settlement company to help you, make sure to do extensive research so you don’t fall victim to a scam. Federal law requires debt relief companies to provide consumers with specific information about their company and how it works. The debt settlement company must discuss openly it’s price and terms. They must also give you a timeframe of how long it will take until your debts will be settled and how you and your credit score will be impacted during the meantime. All fees and costs charged by the Rhode Island debt settlement company must be explicitly explained beforehand.

Any debt settlement company that tells you to stop making payments on your credit cards and doesn’t discuss the negative effects of a debt settlement, such as negative effects on your credit report and the possibility of a lawsuit, is likely not a company you should consider hiring.

If you are putting money into an escrow account each month, the debt settlement company must tell you that the money in the account is your money. If you need to withdraw your money, then you should not be faced with any penalties. Be aware of  debt settlement companies that guarantee you the world and charge fees before negotiating settlements. Debt settlement companies are not allowed to charge you fees before a settlement has been reached. To find a good debt settlement company to work with, you should consult the Better Business Bureau. You can search for each company’s rating and view complaints from past customers. For a more in-depth search, you can check the Rhode Island  Attorney General’s website and the department of consumer protection to see what other complaints have been filed against the company. The department of consumer protections can be reached at the following phone number (401) 274-4400. 

How to Make Your Debt Settlement Work 

To make your debt settlement work, you must ensure that you don’t fall behind on your monthly payments (if you’re paying in installments). Falling behind on even one schedule payment can cause the full amount of your debt to become due, which will mean all the payments you have made thus far would have been made for no reason. You will also want to choose a time of the month when you know you can make the payment. Make sure that your debt settlement payment plan doesn’t get drafted on a day when you have to make your mortgage or student loan payments.

Alternatives to Debt Settlement 

A Rhode Island debt settlement may not be the best debt relief option for you. In some cases, you may end up throwing away thousands of dollars and no one wants to throw away money for no reason. Never pull money out of your retirement to handle your debts, instead look into other options such as debt consolidation, bankruptcy, and debt management plans. These options help to transform the finances of millions of Americans every year.  

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Rhode Island Debt Consolidation 

If debt settlement isn’t a good debt relief option for you, you can look into securing a Rhode Island debt consolidation loan. A Rhode island debt consolidation loan allows you to pay your existing creditors with a new line of credit. This process streamlines your debt payments so that you only have to manage one account. If you have a high credit score, your chances of being approved for a loan are likely. However, without a high credit score, a debt consolidation loan will probably be impossible to obtain at a favorable rate and you’ll want to look into a debt management plan (DMP) instead.

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Rhode Island  Debt Management Plan 

A Rhode Island debt management plan is an option worthy of your consideration if you don’t want to (or can’t) take out another loan to pay your debts. In a debt management plan, your credit counselor will work with you to come up with an agreeable plan to help you manage your debts. These debt negotiations with your creditors can help you eliminate high-interest fees, late fees, and penalties. Some creditors may reduce your total debt. Once a DMP is in place, you’ll stop paying your creditors directly and will instead pay your credit counseling agency once a month. The agency will then pay your creditors on your behalf, using the funds from this monthly payment. 

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Rhode Island Bankruptcy 

If you feel that there is no way out from underneath your mounting pile of debt, then it may be time to look into filing for bankruptcy. Upsolve can give you great information about the bankruptcy process. Filing a Chapter 7 bankruptcy can stop collection calls from debt collectors immediately once your case is filed. You also will not have to repay your total amount of debt. Many people who file a Rhode Island bankruptcy have their eligible debts eliminated in as few as 90 days. Further, bankruptcy can stop any wage garnishments and any levies on your bank account. Upsolve has all the tools you need to determine if you qualify to file for bankruptcy for free. Upsolve has helped thousands of people file for bankruptcy and gain a fresh start. If you prefer to work with an attorney, Upsolve can recommend a bankruptcy lawyer in your town or city.

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