Getting started
Creating a Debt Settlement Savings Plan
How It Works
Debt Settlement Savings Plan
A Debt Settlement Savings Plan will not only allow you to strategize your way out of debt, but it will also act as a roadmap to help minimize the risk of running out of time or money.
02
Negotiating Settlements
Negotiating settlements really comes down to timing. Settlement offers are usually time-sensitive, so it is crucial to ensure that you have funds available to take advantage of them when they happen.
03
Payments, Taxes, & Repairing Credit
The last stage is simply clearing the last settlement payments, seeing if you have to pay taxes on the amounts forgiven, and laying the ground-work to rebuild your credit.
Introduction
Settling your debts is similar to ‘ripping off a band-aid’ – with the intention being that the time saved is worth the temporary sting (to your credit). In cases where someone is only able to afford minimum monthly payments, it may be worth considering settling the debt instead of spending potentially decades making payments that primarily go towards compounding interest rates.
However, every situation is different, as are everyone’s individual goals. Therefore, it is the most important step to carefully weigh your options first before deciding to settle your own debt.
See below for some highlights for and against settling debt:
Pros vs. Cons of Settling Debt
| Pros | Cons |
|---|---|
| Save money on a monthly basis. | Temporary negative credit impact. |
| Save money from long-term interest. | Acounts must close. |
| Saves years or even decades of time. | Possible tax implications afterwards. |
| Reach your goals faster. | Possible legal action if too slow. |
| Be able to rebuild credit easier. | |
| Regain Financial Independence. |
Debt Settlement Savings Plan
A Debt Settlement Savings Plan will act as your roadmap throughout the process of settling your debts. More importantly, it will help ensure that you have enough funds to make the settlement payments down the road.
Negotiating Settlements
Negotiating with your creditors is a much simpler task that many initially think, especially since most creditors will automatically send offer letters (meaning you may not ever have to actually negotiate). When you do have to negotiate, all it really comes down to is making the right offer at the right time.
Payments, Taxes, and Repairing Credit
Once you’ve negotiated your settlements, the last steps are to help you close the chapter of your previous debts and begin a new one. This includes making sure your creditors send you proper documentation, seeing if you need to pay taxes on the amounts forgiven (read more here), and rebuilding your credit to help you reach your future goals.
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only that the information is based on direct experience and is free and available for everyone.