The Complete Guide to Debt Settlement

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Debt Settlement

13 Debt Settlement Myths — Debt settlement is challenging enough without misinformation steering you in the wrong direction. Take a look at the top 13 myths about how debt settlement works and tips on using a debt settlement company.

Don’t Confuse Debt Settlement with Debt Negotiation Companies — Settling your debts is something you can (and should) do either on your own or through a non-profit credit counseling service. What you need to be leery of are for-profit debt negotiation companies with practices that could do you more harm than good.

DIY Debt Settlement

Do-It-Yourself Debt Settlement Strategies — Yes, it is possible to settle your debts on your own for less than you owe. Learn how.

How to Settle Debt with Original Creditors — You don’t have to wait to settle a debt until it’s been sold to a collection agency. In fact, that’s the last thing you want to wait for. Learn how to settle with the original creditor first.

How to Settle Debts with Collection Agencies — Nobody likes dealing with collection agencies, but it’s worth the trouble if you can settle for less than you owe.

How to Use Debt Validation with a Collection Agency — As soon as you receive the first notice from a collection agency, send them a request for debt validation. If they can’t prove the validity of the debt, you owe them nothing. Get the facts.

How to Pay for Delete with a Collection Agency — Just because you pay off a delinquent debt — for the full amount or in a settlement for less than you owe — it doesn’t mean the negative listing automatically falls off your credit reports. For that to happen, you need to negotiate a pay-for-delete.

How to Negotiate Your Credit Rating with a Collection Agency — If you can’t negotiate a pay for delete, the next best thing is to negotiate how the listing will be updated on your credit report. Get the facts about “paid,” “settled,” “paid charge off,” and other listings.

Debt Negotiation Success Stories — Not sure you have it in you to settle your own debts? As these success stories prove, it’s worth the time, effort, and discomfort to at least give it a try.

Legal Issues When Settling Your Debts

How Collection Agencies Could Come After You Post-Settlement — If you don’t get your settlement agreement in writing, you could be sued for it. Some states allow them to settle with you, then sell the remaining balance to another agency for collections. Get the facts.

How to Fight a Debt Lawsuit — If a collection agency is suing you for a debt, the last thing you want to do is ignore it. Learn how to answer and challenge the lawsuit, make them prove what you owe, use the statute of limitations, and file your own lawsuit.

How Debts Discharged in Bankruptcy Can Spring Back to Life — Once a debt is discharged in bankruptcy, you are no longer legally responsible for it. Learn how to respond if a creditor tries to collect on it anyway.

What is a 1099-C IRS Form? — When you settle a debt for less than you owe, the collector files a 1099-C with the IRS for Cancellation of Debt. Whatever amount is forgiven is treated like income that you have to pay taxes on. Learn more.

7 Steps for Dealing with a 1099-C — There are circumstances in which you may not have to pay taxes on canceled debt. Get the facts about exclusions and exceptions.

Debt Collection Practices

How to Keep Debt Collectors from Ruining Your Credit — Once a debt gets turned over to a collection agency, your credit is going to take a hit no matter what. But there are things you can do to minimize the damage.

How IRS Hiring Collection Agencies Could Affect You — If you owe back taxes to the IRS, a change in federal tax collection should be of interest to you. As of April 2017, the Internal Revenue Service is turning overdue accounts over to private collection agencies. Find out how this change could affect you.

What You Need to Know About Junk Debt Buyers — The older your debt, the more likely it has been sold multiple times, ending up in the hands of a junk debt buyer. Whether they’re trying to collect or suing you, get the facts about how to deal with them, like making them prove the debt belongs to you.

How to Protect Yourself from Zombie Debt — Once a debt has passed the statute of limitations, you are no longer legally required to pay it. Get the facts about zombie debt so you can avoid paying something you don’t owe.

How to Protect Your Child’s College Fund from Debt Collectors — Are college savings safe from collectors? It depends on how it’s saved, how long it’s been saved, and state laws. Get the facts.

Who is MRS Associates? — If MRS Associates is trying to collect a debt from you, you may be understandably leery of paying a company you’ve never heard of. We can confirm that MRS Associates is a legitimate collection agency. Learn more about this company, including what to do if you hear from them.

Consumer Credit Counseling

The Basics of Consumer Credit Counseling — See the history of consumer credit counseling, how it works, and a list of recommended companies.

Credit Counseling FAQs — Is all credit counseling non-profit? What information should you be prepared to provide to credit counselors? Does credit counseling hurt your credit? How long does it take? What does it cost? Get answers to these and other commonly asked questions about credit counseling.

Consumer Credit Counseling Services (CCCS) — A member of the CCCS network reached out to us to respond to our criticism of the services. Here is what they had to say. (Note, there are several other companies we recommend above CCCS; see the FAQs above.)

How Will Debt Relief Affect Your Credit? — It depends on the type of debt relief you seek. Learn how your credit is affected when you pay off your balances, consolidate your debt, get credit counseling, negotiate and settle your debts, and file for bankruptcy.

Information on Debt Consolidation Companies

Debt Consolidation Rules — What disclosures are debt consolidation companies required to make? What claims are they allowed to make? Are they allowed to charge up-front fees? Get the facts.

Debt Consolidation: The Basics — See the pros and cons of debt consolidation, as well as types of debt consolidation loans, alternatives, and scams to watch out for.

How to Find a Reputable Debt Consolidation Company — Are they members of the NFCC or AICCCA? What are their counselors’ qualifications? What do they charge? How are they funded? Get answers to these and other questions you need good answers to before hiring a debt consolidation company.

How to Get Out of a Debt Consolidation Program — No doubt you entered into it with the best of intentions. Unfortunately, some debt consolidation programs set consumers up to fail. Get tips on getting out of it.

Managing Your Debt

Debt-Free Dos and Don’ts — Building good credit depends on you using it. But how do you reconcile that with debt-free living? Find out.

Questions to Ask Yourself Before Taking on More Debt — Can you pay with cash instead? Are you using the most cost-effective type of debt? Have you shopped around for the best terms? Ask yourself these (and other) questions before taking on new debt.

How to Eliminate and Reduce Debt — Damage already done? Don’t give up. Take a look at strategies that can, slowly but surely, reduce and eliminate debt.

Bad Habits That Keep You in Debt — Does your mood dictate buying decisions? Does money spend easier when you carry cash? Do you charge things just for the rewards? Face the truth about these and other bad habits that could be keeping you in debt.

Are You In Debt Denial? — Do you spend without a monthly budget? Do you let unpaid bills pile up? Do you frequently pay your bills late? “Yes” answers to these and 15 other questions could mean you’re in debt denial.

How to Handle the Stress of Debt — Finding money in your budget to pay down debt is tough enough. What makes it worse is the stress and anxiety that comes with it. Get tips on how to handle it.

How to Use a Personal Loan to Pay Off Debt — When you’re drowning in debt, taking on new debt is probably the last thing on your mind (as it should be). But a personal loan may be worthy of consideration if you can use the new debt to pay off the old at a lower interest rate.

Why All That Debt May Not Be Your Fault — Yes, you are responsible for your financial choices, but what external circumstances are driving them?

Debt Tips for Newlyweds — Whether you knew exactly how much debt you’d be dealing with once you were married, or it came as a complete surprise, get tips on making it work as newlyweds.

How to Handle Debt During a Break-Up — No matter how anxious you are to sever ties, it is critical that you sort out your finances before parting ways. Get tips on how to handle joint debt.

What Happens to Debt When You Move Out of the Country? — Do you still owe the debt? Can the creditor sue you for it? What happens when you return? Get answers to these and other questions about what happens to your debt when you leave the U.S.

Types of Debt

Credit Card Debt

How Credit Card Debt Is Handled After Someone Dies — What if there isn’t enough money in the estate to pay off the debt? Are family members held responsible? What if you’re a co-signer or authorized user? Get answers to these and other common questions about credit card debt of someone who is deceased.

How to Handle Credit Card Debt Lawsuits — If you’re sued for credit card debt, the last thing you want to do is ignore it, as this will only award the credit card issuer a default judgment. Learn how to respond to a credit card lawsuit, and how to fight it.

Student Loans

How to Manage Student Loan Debt — How does a Pay As You Earn plan work? Can you consolidate student loans? What’s the difference between forbearance and deferment? Get answers to these and other questions key to successful student loan management.

10 Debt Management Tips for College Grads — Starting out after college is challenging enough without debt hanging over your head. Student loans may be a given, but there are things you can do to minimize them and other debt-incurring expenses.

Medical Debt

How to Deal With Medical Debt and Hospital Bills — Medical debt is the number one reason people file for bankruptcy. Fortunately, there are things you can do to keep it from reaching that point (or going to collections in the first place). Get tips to help you along.

How to Negotiate and Settle Medical Debt — Have your unpaid medical bills already gone to collections? Follow these steps to negotiate and settle your debt before the situation gets any worse.

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