What is debt settlement?
Debt Settlement (also known as debt negotiation or negotiated debt settlement) means that your debt is negotiated down to a reduced amount and paid off in a lump sum. Settlement is one of the most effective choices available to consumers. It’s a great option if you are experiencing a financial hardship that has you falling behind on your payments. Why would creditors choose to settle debts rather than simply charge you interest and late fees? Well, creditors know that if you get into such a bad financial position that you can’t pay your monthly payments, you may decide to declare bankruptcy or simply do nothing. In this case they may get nothing. Therefore, they are usually willing to settle for a lower amount than risk getting nothing at all.
What makes me a good candidate for debt settlement?
A debt settlement program is not for everyone. Qualified candidates are those who have a legitimate financial hardship, which has caused them to (currently or in the near future) fall behind on their payments to creditors. Aleevly Debt Relief will not welcome anyone into the program that has the intentions of defrauding, deceiving, or swindling their creditors. We only represent consumers who are truly in need of our services and stand to significantly improve their financial situation.
Why should I use Aleevly Debt Relief to settle my debts as opposed to handling it myself?
Our experienced debt arbitrators have established great relationships with the creditors & collection agencies. Our arbitrators have extensive knowledge in Federal & State consumer laws & exercise the Fair Credit Reporting Act, Fair Credit Billing Act, as well as the Fair Debt Collection Practices Act to help settle your debt.
How does debt relief affect my credit?
Our goal is to help you get out of debt as fast as possible by negotiating with your creditors to get them to accept significantly less. Depending on the condition of your credit report, any debt settlement or debt negotiation program, could negatively affect your credit. Negative information could remain on your credit report for up to seven years. By engaging in good credit behavior, anyone’s credit score could recover over time. Results vary depending on your payment history, credit utilization, length of credit history, and debt-to-income ratio.
How is debt settlement different from bankruptcy?
Bankruptcy is an option that is generally treated as a last resort. It will remain on your credit report for 10 years & you can be denied employment, state licenses, insurance, as well as tenancy of an apartment. You can be denied virtually any type of credit with a bankruptcy on your report. Since the bankruptcy laws have changed recently, it is even more difficult to qualify for Chapter 7, the method of liquidating assets to eliminate your debt. You will not be allowed to discharge alimony, child support, taxes, student loans, judgments, or any loan on the bankruptcy petition. Under Chapter 13 bankruptcy, your debt payments are simply restructured meaning you will still have to pay a percentage of your debts while you suffer the consequences of bankruptcy. Debt settlement is an alternative to bankruptcy.
Do I have to include all my debts into a debt settlement program?
In order to enhance the success of the program, we strongly encourage that all of your qualified creditors enter into the program. Your debt consultant will walk you through all of the program benefits when including all qualified creditors and potential opportunities of leaving out a debt, if that will be in your best interest.
Will I owe taxes on my forgiven debt?
The IRS considers a forgiven debt as taxable income, so at the end of the year they will expect taxes to be paid on the settlement. IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, may exempt you from this tax. Please contact a tax adviser to discuss this issue further.
How do I choose a good debt relief company?
We recommend looking for debt relief programs that are transparent about the types of debt they accept, give a realistic timeline and estimate of your potential savings. Debt relief companies are legally not allowed to charge fees until after a debt has been settled.
Will my debts be sent to a law firm?
Creditors do have the right to send debts to collection agencies and/or law firms to collect a debt. Lawsuits are actually only filed on a small percentage of enrolled debts. If this happens to you, we established a relationship with a third party service from a law firm that can negotiate with the goal of resolving the debt. Note that the settlement percentages associated with settlement of debts in litigation are often higher than typical non-legal settlements. Please note that we are not a law firm and cannot provide legal advice or legal representation.