is it good to hire a third-party debt settlement agency
8 months ago
I have a debt of 24 lakhs, which includes 6 credit cards and 4 personal loans. The monthly EMI is approximately 1.5 lakhs, and my salary is 48k. Should I hire a third-party debt settlement agency with some charges, or should I request the bank for a settlement? I have no assets or property to sell, and I am solely dependent on my salary
A.Dear Client,
Lenders are not legally obliged to settle a debt lowering your outstanding debt, but because they want to protect their bottom line, they may agree to a debt settlement to avoid further financial loss. You can try to negotiate a debt settlement on your own, but sometimes it's typically done through third parties like debt relief companies, which you may hire to negotiate the settlement matter with the lender on your behalf. With this method, you will make payments to the debt settlement company rather than your creditors/lenders, along with any fees. Debt settlement is an agreement between a lender and a borrower in which the borrower repays a portion of a loan balance and the lender forgives the remainder. You may consider starting the negotiation by offering to pay 25% or 30% of your outstanding balance in return for forgiveness on the rest. But, it may be noted that while there are legitimate debt relief/settlement companies, there are also many scam operations. So, if you're considering one, the Consumer Financial Protection Bureau(CFPB) suggests for contacting your state attorney general's office and local consumer protection agency to ask if they have any consumer complaints on file about that company. Some states require that debt settlement companies be licensed, which may provide some added protection. Although a debt settlement can offload some of your financial crisis, there are also few potential risks and downsides to consider. First, a debt settlement will affect your credit score. That will make it more difficult for you to get credit or good interest rates in the future. Another potential drawback is that when you settle debt, you could face tax consequences. Finally, when you settle a debt with a credit card company, your account is closed once the settlement is complete. So you could potentially have no credit facility to use a credit card further owing to your poor credit score.
Lenders are not legally obliged to settle a debt lowering your outstanding debt, but because they want to protect their bottom line, they may agree to a debt settlement to avoid further financial loss. You can try to negotiate a debt settlement on your own, but sometimes it's typically done through third parties like debt relief companies, which you may hire to negotiate the settlement matter with the lender on your behalf. With this method, you will make payments to the debt settlement company rather than your creditors/lenders, along with any fees. Debt settlement is an agreement between a lender and a borrower in which the borrower repays a portion of a loan balance and the lender forgives the remainder. You may consider starting the negotiation by offering to pay 25% or 30% of your outstanding balance in return for forgiveness on the rest. But, it may be noted that while there are legitimate debt relief/settlement companies, there are also many scam operations. So, if you're considering one, the Consumer Financial Protection Bureau(CFPB) suggests for contacting your state attorney general's office and local consumer protection agency to ask if they have any consumer complaints on file about that company. Some states require that debt settlement companies be licensed, which may provide some added protection. Although a debt settlement can offload some of your financial crisis, there are also few potential risks and downsides to consider. First, a debt settlement will affect your credit score. That will make it more difficult for you to get credit or good interest rates in the future. Another potential drawback is that when you settle debt, you could face tax consequences. Finally, when you settle a debt with a credit card company, your account is closed once the settlement is complete. So you could potentially have no credit facility to use a credit card further owing to your poor credit score.
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A.Dear Client,
When facing a substantial debt burden, there are several options you can consider:
1. Negotiating with the Banks: You may try contacting your creditors (credit card companies and lenders) directly to discuss a possible settlement or restructuring of your debt. Some banks offer debt consolidation or settlement programs that can help you repay your debts in a more manageable way. It may be worth requesting a meeting with the bank to discuss your financial situation and explore potential solutions.
2. Engaging a Debt Settlement Agency: You mentioned considering a third-party debt settlement agency. While these agencies can assist in negotiating with your creditors on your behalf, it's essential to thoroughly research and select a reputable and reliable agency. Be cautious of agencies that charge exorbitant fees or make unrealistic promises. Before engaging any debt settlement agency, carefully review their terms, conditions, and fees, and consider seeking legal advice to ensure you are making an informed decision.
3. Seeking Legal Assistance: Consulting with a lawyer experienced in debt management and negotiation could provide valuable advice and guidance. They can help you better understand the legalities, rights, and options available to you. A legal professional can review your financial situation, assess the implications of each option, and guide you towards the most suitable course of action.
4. Bankruptcy: Bankruptcy may be an option worth exploring as a last resort if you are unable to repay the debt. However, bankruptcy should only be considered after careful consideration of its consequences and potential impact on your financial future. Consulting with a bankruptcy lawyer would be advisable in such cases.
Thank you.
When facing a substantial debt burden, there are several options you can consider:
1. Negotiating with the Banks: You may try contacting your creditors (credit card companies and lenders) directly to discuss a possible settlement or restructuring of your debt. Some banks offer debt consolidation or settlement programs that can help you repay your debts in a more manageable way. It may be worth requesting a meeting with the bank to discuss your financial situation and explore potential solutions.
2. Engaging a Debt Settlement Agency: You mentioned considering a third-party debt settlement agency. While these agencies can assist in negotiating with your creditors on your behalf, it's essential to thoroughly research and select a reputable and reliable agency. Be cautious of agencies that charge exorbitant fees or make unrealistic promises. Before engaging any debt settlement agency, carefully review their terms, conditions, and fees, and consider seeking legal advice to ensure you are making an informed decision.
3. Seeking Legal Assistance: Consulting with a lawyer experienced in debt management and negotiation could provide valuable advice and guidance. They can help you better understand the legalities, rights, and options available to you. A legal professional can review your financial situation, assess the implications of each option, and guide you towards the most suitable course of action.
4. Bankruptcy: Bankruptcy may be an option worth exploring as a last resort if you are unable to repay the debt. However, bankruptcy should only be considered after careful consideration of its consequences and potential impact on your financial future. Consulting with a bankruptcy lawyer would be advisable in such cases.
Thank you.
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