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Quote by Jean Chatzky

“If you'd asked me a few years ago about debt settlement companies, I probably would have told you to avoid them.”

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Jean Chatzky is a seasoned financial journalist, born on November 7, 1964. She is known for her in-depth research and insightful views on personal finance, having served as an editor and columnist for several prominent media outlets. more

“The Bankruptcy Reform Act of 2005 made it harder for individuals to file bankruptcy, which is always the last resort. Unfortunately, simultaneously consumers racked up so much debt that counseling companies - which are higher up on my list if you need help managing your debt - are sometimes unable to help. So if you fall into this camp, debt settlement may be something to consider.”

“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.”

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Author:Jean Chatzky

“You really don't need to hire a debt settlement company to negotiate with your creditors.”

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Author:Jean Chatzky

“Unless you have multiple accounts that you need to negotiate and you think the project is just too big to tackle on your own, you're better off just calling your creditors directly.”

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Author:Jean Chatzky

“If you are able to settle, you'll be getting off rather easy. Debt settlement companies can sometimes get you off the hook for a large percentage of your debt - in many cases, up to 50% will be written off.”

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Author:Jean Chatzky

“You settled a debt instead of paying in full will stay on your credit report for as long as the individual accounts are reported, which is typically seven years from the date that the account was settled. Unlike with bankruptcy, there isn't a separate line on your credit report dedicated to debt settlement, so each account settled will be listed as a charge-off.”

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Author:Jean Chatzky

“If you're filing bankruptcy, you will likely want to hire an attorney. But for debt settlement, a company is sufficient, or as I said, you can often do the legwork on your own.”

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Author:Jean Chatzky

“No company can promise an end date, but if you have multiple debts, the first one should be settled within a year.”

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Author:Jean Chatzky

“You fall a bit behind on a credit card bill, your interest rate soars, your minimum payment rises, and you start falling more and more behind every month. You don't see an end. But you don't want to file bankruptcy either. What you can do - and should do - is negotiate.”

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Author:Jean Chatzky

“You need a clear, legitimate excuse for why you're behind [the bankruptcy], such as a layoff, divorce, or medical emergency. Be prepared to back up the circumstances with supporting documents. Anything you have to substantiate your story - including proof that you have, for instance, been actively looking for a new job - will help.”

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Author:Jean Chatzky

Quote by Jean Chatzky

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