“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
“A consolidation makes sense only if you can lower your overall interest rate. Many people consolidate by taking out a home equity line loan or home equity line of credit (HELOC), refinancing a mortgage, or taking out a personal loan. They then use this cheaper debt to pay off more expensive debt, most frequently credit card loans, but also auto loans, private student loans, or other debt.” PeopleIfsUseHomeInterestLinesPayStudentsRateCreditDebtCardsMake SenseExpensiveEquityLoanMortgageCheaperCredit CardInterest RateStudent LoanConsolidationHome Equity Author:Jean Chatzky
“You must be sure - and I mean absolutely positive - that you have the willpower to pay off those credit cards and not use them again.” MeanUsePayCreditCardsWillpowerCredit Card Author:Jean Chatzky
“If you are, consolidating at a lower interest rate can help you pay off your debt faster. But if there's even a small chance that you'll spiral back into debt, it's not for you.” IfsHelpingInterestChancePayRateDebtFasterSpiralsInterest Rate Author:Jean Chatzky
“Pay cash. For some reason, it's harder for people psychologically to part with their cash than it is to swipe a card. Maybe it's the act of physically seeing the money change hands, or maybe it's because you don't want to break a $20 for a $2 cup of coffee.” PeopleWantReasonHandsPayBreakSeeingHarderCoffeeCardsCupsCashCoffee Cup Author:Jean Chatzky
