What Debts are Suitable for Debt Settlement?
What Debts are Suitable for Debt Settlement? Not all debts are suitable for enrollment in a debt settlement program. Before considering enrolling in such a program it is critical to be aware of this information.
Several types of debts are simply not suitable for settlement. Government-related debts such as traffic tickets, fines, child support, student loans, IRS debt (taxes), and alimony cannot be settled. There are professionals that can help with some of these cases but they usually involve lawyers who specialize in those cases.
There are a few types of debts where creditors simply do not settle at all. The most common instance of these is called payday loans. They simply will not reduce the principal owed by one cent. Other types of debts in this category vary by creditor and by individual situation. Once a debt is found to be completely unsettle able it should be removed from the service.
Other debts cannot be settled because they are secured by some collateral. Mortgages, secured loans, and car loans are examples of secured debts which cannot be settled. If the security is taken away or surrendered such as in repossession or other form of revocation then the remaining balance is known as a deficiency balance and that, now unsecured, debt is able to be settled.
For some debts it is the status of the debt and not the type of debt that determines eligibility for a debt settlement service. Newly opened credit cards (opened in past 6 months) or cards with recent large purchases or balance transfers should, in general, not be placed into this type of program. This is the case as a creditor could easily claim that fraud is being perpetrated and rapid legal action would likely follow.
The most important criteria for enrolling a debt into a debt settlement program has nothing to do with the debts themselves but rather with the client. A good client must have real hardship before he/she enrolls any debts into such a service. Debt settlement is an alternative to bankruptcy. Even the most eligible debt enrolled by an ineligible client could easily cause problems for the client.
Before enrolling in a debt program it is important to do an assessment of your debts as well as your financial situation. Be aware of which of your debts are secured, which are government-related, and which have some likelihood of being settled. Most importantly one should insure their hardship is sufficient enough to realize the real benefits of a debt settlement program.
About the Author:
Crusader Consumer Services is a debt and credit help business. We are members of the Better Business Bureau. We offer free quotations and free consultations. Visit us on the web at www.crusaderservices.com/
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