“Debt settlement companies work as a middleman between you and your creditor. If all goes well (and that's a big if), you should be able to settle your debts for cents on the dollar. You'll also pay a fee to the debt settlement company, usually either a percentage of the total debt you have or a percentage of the total amount forgiven.” IfsShouldWellsBigsAblePayCompanyAmountDollarsDebtSettlingCentsForgivenPercentagesSettlementFeesCreditorsMiddlemenDebt Settlement Author:Jean Chatzky
“The debt settlement company will direct you to stop paying your creditor and instead send the money directly to them each month. The company's goal is to demonstrate to your creditor that you don't have the money to pay up - that's your leverage. After a few months, the company will typically go to the creditor and say, "I'm holding X dollars on behalf of your customer. He doesn't have the money to pay you, so you should take this amount as a settlement or you'll end up with nothing." If the creditor wants to get paid badly enough, it will take the money.” IfsWantShouldEndsEnoughGoalPayCompanyMonthsAmountDirectPaidDollarsDebtCustomersBehalfSettlementCreditorsEach MonthDebt Settlement Author:Jean Chatzky
“After explaining why you're in trouble, ask the creditor if the company would be willing to accept a smaller amount. Start negotiations at about 30% of the total amount due, with the end goal of paying 50%.” IfsEndsWould BeAsksGoalCompanyAcceptingTroubleWillingAmountDuesNegotiationExplainingCreditors Author:Jean Chatzky
“Sometimes a creditor is willingto do this as a bargaining point - you give the creditor cash in hand, it gives you a positive listing on your credit report - even though you haven't paid the full amount. Get this agreement in writing.” GivingWritingSometimesHandsHavensAmountPaidCreditReportsAgreementCashBargainingCreditors Author:Jean Chatzky
“Most people don't know this, but if you settle a debt for less than the amount you owed, you are potentially responsible for taxes on the forgiven debt. Look at it this way: You received goods and services for the full amount of debt, but you're only paying for a portion of it - sometimes less than 50%. Anything more than $600 is generally considered taxable, but the IRS will sometimes waive the tax if you can prove that your assets were less than your liabilities when the debt was settled.” PeopleIfsKnowsWayLooksSometimesAmountProveTaxesResponsibleDebtSettlingGoodsAssetsPortionsForgivenLiabilityIrsGoods And Services Author:Jean Chatzky
