According to the latest statistics released by the Federal Reserve Bureau, the total amount of consumer debt in the United States stands at approximately $2.5 trillion.
The idea overcoming your debt, particularly in times of financial hardship, may seem like a daunting, hopeless task. However, there are several secrets that you should be privy to that will aid in resolving debt and restoring your peace of mind.
ClearOne Advantage’s Nine Secrets to Successfully Settling Your Debt
1. DIY Debt Settlement
There are many debts that can oftentimes be settled by the consumer. If you have confidence in your negotiation skills and understand how the settlement process works, you may want to try to negotiate with creditors without the aid of a settlement company. You could also begin saving and setting aside your own settlement funds to pay the settlements, just as we’d have you do. So why hire us? It’s really no different than hiring a plumber or an electrician. You could certainly give it a try yourself (with unpredictable results), but hiring a professional might save time and money while giving you satisfaction that the job has been done right.
There are several reasons why our clients decide to use ClearOne Advantage instead of negotiating settlements on their own:
Negotiations can be stressful. Using a debt settlement company can eliminate much of the stress and hassle that comes with directly contacting creditors and collection agencies. A debt collector’s job is to have you pay as much of the balance as possible. We have professional negotiators that do nothing but negotiate settlements for our clients every single day.
Well informed industry professionals serving you. Our staff has a knowledge base that includes determining the approximate amounts creditors and collectors will settle debts for at a given period of delinquency. Our wealth of industry expertise, obtained though years of successfully settling client debts, is used to create each client’s tailored program projections. In addition, we are often able to settle large blocks of debt in bulk, thus employing economies of scale to obtain settlements for our clients.
Support System for clients’ long term financial success. ClearOne Advantage is committed to our clients’ success. Many consumers settling on their own debt may overlook the importance of a solid, motivating support system in successfully completing debt resolution and obtaining financial stability. Just like a personal trainer works individually to motivate and help their clients succeed, our customer service and negotiations teams are committed to doing everything possible to motivate and support our clients through our program. However, if you take on the task of settling your own debts, make sure to have a solid support system in place. Seeking out people in your life that you can bounce ideas off of and discuss settlement strategy with can be important assets to the success of any do-it-yourself debt settlement program!
2. Be an informed Consumer
If you are planning on hiring a company to settle your debts, you need to be an informed consumer. Unfortunately, the marketplace has some companies claiming quick results and offering settlements for pennies on the dollar. In addition, with recent law changes that have gone into effect, some debt settlement companies are more focused in using loopholes to the law rather than focusing on what’s best for their clients. When selecting the best debt relief option for you, it is important to do some research and ask some questions.
For example, make sure any settlement company you are considering is not charging you any up-front fees. Some will claim to be attorney-driven models as a way to force you to pay a fee up front. Don’t fall for the hype; only work with a debt settlement company that complies with both the letter and the spirit of the FTC Rule, which regulates how debt settlement companies may charge their fees. Good, reputable companies will only charge you a fee after they’ve successfully settled a debt.
In addition, make sure the debt settlement company you are considering is a member of the American Fair Credit Council. As indicated on the American Fair Credit Council’s website:
The American Fair Credit Council is the leading association of professional Consumer Credit Advocates organized around a few very simple yet very powerful principles:
To support consumers dealing with overwhelming credit and debt problems;
To promote and enforce industry “best practices”; and
To advocate for consumer-centric legislation at the state and federal level that protects consumers through strong regulation and preservation of choice of debt relief options.
AFCC-certified Consumer Credit Advocates work on behalf of consumers by standing up to their creditors, thereby helping them get back on the road to financial independence. They do this by negotiating directly with creditors to secure a resolution that reduces the amount owed to a level the consumer can manage. In return for their services, AFCC-certified Consumer Credit Advocates are paid a fee by the consumer (never by the creditor) but ONLY WHEN THE DEBT IS RESOLVED.
To avoid any hint of impropriety, AFCC members do not handle, manage, or otherwise control their clients’ funds. All AFCC members agreed to abide by our Code of Conduct, which is the strictest in the industry.
ClearOne Advantage is not only an Accredited Member of the AFCC- two of our executives were elected by the industry to sit on the AFCC’s Executive Board.
3. Settling for Less to Benefit You
Contrary to what you may be led to believe, most creditors are willing to settle your unsecured debts, including credit cards, medical bills deficiency balances and personal loans. The amount that they will settle for varies on the debt’s delinquency level, the creditor and your financial situation.
For example, there may be certain windows-in-time during pre account charge-off where a particular creditor may settle for less. In addition, some settlements are best post- charge-off. This can be a complicated process, but by remaining diligent, doing your research, and employing successful negotiation tactics, you can generally settle your debt for less than you owe in consideration for a legitimate financial hardship. After all, if your creditors force you into bankruptcy, they risk receiving nothing at all.
The key in resolving a debt for a lesser amount lies in the negotiation process, which is where ClearOne Advantage comes in.
Our team of trained negotiators will approach each of your creditors, with the goal of negotiating the best settlements of your enrolled accounts for less than the full outstanding balance owed. Due to our size, relationships within the industry and knowledge of the creditors’ own processes, we are in a prime position to negotiate on your behalf.
4. Negotiations can begin in as early as 30 days
While each case varies, debt settlement negotiations can begin as early as 30 days after the debt becomes delinquent. It will depend on a number of factors, including the creditor, how behind in payments you are and your financial goals. The two most important aspects to your settlement timing, aside from your creditors’ policies, will be the money you have available for the settlement and the hardship you are experiencing.
5. The Nuclear Option: Bankruptcy
Many debt settlement clients are seeking to pay back as much of their debt as they can afford, without resorting to filing bankruptcy. While it may seem counterproductive for a creditor to settle for anything less that the full amount of an unsecured debt, they are keenly aware that a consumer may have the option to declare bankruptcy if their financial hardship becomes insurmountable. Declaring bankruptcy could result in the creditor not recovering any of the debt owed from the consumer. Hence, debt settlement often serves as a viable alternative for creditors to recover a significant portion of the original debt.
6. Negotiating Multiple Installments to Creditors can lessen the Burden
Large, single payments demanded by creditors to settle a debt can seem off-putting and discouraging to you. Fortunately, it is often possible to negotiate smaller, incremental payment plans to lessen the burden to consumers who simply can’t pay a high lump-sum settlement payment. Creditors are usually willing to settle in multiple installments as opposed to demanding the entire settlement amount in an up-front, lump sum. It’s a matter of dollars and good sense: Something is better than nothing at all.
7. Your Credit Score May Not be as Important As Getting Out of Debt
Remember, your credit score is good for one primary thing: to get more debt. The goal of debt settlement is to get you out of debt. Many of our clients have made the conscious decision that “enough is enough”. They understand that resolving their debt takes precedence over maintaining their credit score. Once you graduate from the program, you can begin rebuilding your credit score.
If you need to maintain a good credit score for purposes of security clearance or otherwise, speak with your supervisor. Often times our clients’ supervisors are willing to allow them to resolve their debts with the aid of a debt settlement program, even though their credit score may decrease. After all, most people consider it more important to be free of overburdening debt than maintaining the ability to accumulate the debt to begin with.
However, if you absolutely must make a large purchase in the very near future (e.g. a car to get to and from work) or need to maintain a good credit score for employment or otherwise, a decrease to your credit score may be more harmful. But, you should first take a look at your credit score presently to see if it already is damaged.
8. Buyer Beware: Once Your Debt is Resolved, Credit Card Companies Will Want You Back
Winning the battle against your debt is only the beginning. In order to stay debt-free, you will have to become disciplined and not fall back into old habits. You may be surprised to find that after resolving your debt, credit card companies are often times more than eager to offer you new lines of credit. The lure of a new line of credit may seem like an enticing proposition, but it is critical for you to remember that signing up for a new credit card may begin the cycle all over again. Try to keep the number of credit cards you have down to a minimum, use them only in cases of true emergency and commit yourself to paying more than the minimum every month.
9. The Ultimate Secret: Get Out and Stay Out of Debt
Debt settlement is only beginning of the journey to achieving financial stability. At ClearOne Advantage, we strive to work with our clients to develop a solid, realistic debt resolution plan. However, our ultimate goal is to give each client the proper tools and education to make sound financial decisions in the future and remain debt-free long after their settlement program is complete.
Here are a few rules to guide you in establishing good financial habits and keeping your manageable.
Spend less. At the most basic level, staying out of debt can be seen as simply spending less. Of course, this is easier said than done. Create a realistic household budget and stick to it.
Pay cash. Debit cards are handy but can make you spend more than you can afford. Know what you can spend. Pay cash if you can. If you don’t have the money, then you probably don’t need it.
Ignore credit card offers. Credit card offers seem to be in never ending abundance in your mail box. Fight the urge for “easy” funds and use credit cards only for emergencies.
Be realistic. We live in a consumer society that makes everything attractive. Ignore the siren calls. If you don’t need it, don’t buy it. If you can’t avoid spending, don’t go to a certain store. Invest in a hobby or something that will keep you busy and satisfy that desire to have something new.
Read other articles from ClearOne’s BlogOne: Debt Can be Bad for your Health
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