How to Settle Your Debts in Vermont

Collect the Details About Your Debts 

The first thing you’ll want to do is collect details about what you owe. You’re going to want to know your current interest rate, minimum or monthly payment, and the current balance for each account you’re interested in settling. You should be able to find this information on your most recent statements. It’s actually a good idea to gather this information for all of your debts, including those you don’t expect to settle so that you can present your creditors and credit counselor with a complete financial picture. 

You’ll also want to pull a free copy of your credit report. This is necessary because it’s very common for credit card companies and other creditors to assign or sell delinquent accounts to collection agencies or other debt collectors once accounts become past due. You will therefore need to approach the current holder of your debt to enter any binding settlement agreements. Once you have all the information you need, you can categorize your debts into unsecured debts (credit card debts, gas cards, signature loans) that are more likely to be open to settlement and other types of debt that are not well-suited to settlement (like student loans, secured debts, and overdue taxes.) This should help you see whether settling any of these debts you can bring you the debt relief you're seeking. 

Collect Details About Your Ability to Settle Your Debts

Next, and equally important, you’ll need to figure out your ability to settle your debts. This will come down to whether you have access to money to fund your lump sum offers or the ability to set aside money very quickly to fund lump sum offers in the next month or two. Most people don’t have access to significant liquid assets, so you’ll probably need to assess your monthly income and budget to see how much you can save and how quickly you can save for a settlement offer. Be sure to evaluate all income that you receive regularly, as you won’t want to overlook a possible source of income that could be used to fund your settlement goals. 

After you’ve determined your monthly income. you’ll need to move on to your budget. Include all the monthly payments you make. For variable costs (like groceries) aim for a good average. You should also account for expected costs that aren’t monthly (like oil changes) and set aside funds so that you can cover these bills when they come due. Then you can subtract your expenses from your income and see how much money, if any, is left over. That's the amount that you can reasonably set aside to fund your lump sum settlement offers. If there's no money left at the end of the month, debt settlement is probably not a feasible option, so you may want to consider a debt management plan or Chapter 7 bankruptcy instead. 

Learn About the Costs to Settle Your Debts in Vermont 

There will be costs associated with any debt settlement, whether or not you decide to hire a Vermont debt settlement company to help you with your negotiation process. This is because you’ll necessarily incur late fees for late or non-payment before you’ll be able to qualify for debt settlement. If you do choose to hire a Vermont debt settlement company, you'll also need to pay their fees for service as either a percentage of your total debt or your amount saved. When possible, it’s best to go with a Vermont debt settlement company that charges a percentage of your total savings, because this helps to incentivize the company to get you the best possible deals. You'll also have to pay bank fees associated with a third party bank account if the company requires you to deposit your monthly payments into an escrow account. A reputable Vermont debt settlement company will charge their fees as settlement agreements are reached. If the company tries to charge their fees upfront before reaching any agreements, that's a big red flag and you should avoid working with that debt relief company. 

Decide Whether to Work with a Vermont Debt Settlement Company

You don't have to hire a Vermont debt settlement company to pursue this path. Anyone can settle debts directly with their creditors. If you're organized, computer-savvy, detail orientated and not afraid of debt negotiation, you may benefit from moving forward on your own. The benefits here include avoiding fees charged by a debt settlement company, staying in complete control of the process, and having the chance to settle with creditors who have a policy of not working with debt settlement companies. Keep in mind, however, that this will require a good deal of time and effort on your part, which can easily get overwhelming on top of your regular obligations. The biggest downside, however, to not working with a Vermont debt settlement company, is that you miss out on insider knowledge. This includes knowing what each creditor might typically accept to better inform your settlement offers.

Research Vermont Debt Settlement Companies

It’s important to research Vermont debt settlement companies to make sure that you sign on with a reputable one. There's a good deal of information you can get from the Vermont debt settlement company itself. They are required to give you information regarding their prices and terms, an expected timeline for results, and estimated amounts for reasonable settlement offers. If their debt settlement program relies on you not making payments or becoming delinquent on your debts, they must fully inform you about possible negative consequences, including late fees, damage to your credit score, and possible lawsuits from creditors. 

You can also be on the lookout for red flags. If a Vermont debt settlement company guarantees success, that should make you immediately suspicious. Remember, no creditor has to agree to debt settlement. If the debt settlement company is pushing a “new government program” you should find out additional information as this is usually a sign of a scam. And finally, if they try to charge you in advance of any settlement agreements you should look elsewhere. 

You can check with the Vermont attorney general’s office in their consumer protection unit to see if complaints have been filed against a company you're considering. Another resource that maintains a database of complaints is the Better Business Bureau.

How to Make Your Debt Settlement Work

You can follow some best practices to better ensure that your debt settlement will work. If you're setting aside funds as part of a payment plan, make sure that the monthly payment is not due on the same date as any other large payment. It’s usually a good idea to avoid the first of the month. Also, make sure to think ahead when saving for debt settlement offers. Are you trying to save for a settlement offer during a time of year when you have other, significant, irregular expenses due? Don’t set yourself up for failure by forgetting to account for other expenses that might be coming in soon. 

Alternatives to Debt Settlement

Debt settlement can be a great debt management system under the right circumstances and with the right types of debts. There are also alternatives to pursue if you can’t reasonably fund debt settlement or you have debts that are not unsecured and/or unlikely to settle.