When to Hold Off on Debt Settlement

Debt settlement can be extremely beneficial for individuals in the Lilburn area who are behind on debts and have the ability to make an immediate payment for a portion of that debt to a creditor. In exchange for a partial payment, debt settlement involves the creditor agreeing to forgive the remaining debt. The process does allow many people to get a fresh start for much less than what they owe. At the same time, it is important to know that the moment when you begin negotiations about a settlement agreement with a creditor can affect the amount you ultimately pay. Sometimes the timing can even impact whether the creditor wants to accept a debt settlement offer at all.

To be clear, there may be some cases in which it makes sense to hold off temporarily on debt settlement negotiations. When can it make sense to wait? Consider the following information from our Lilburn debt settlement lawyers.

You Are Not Far Enough Behind on Your Debt 

Typically, a creditor will only be open to a very appealing debt settlement agreement if the debtor is very behind on their debt. In other words, as a CBS News report suggests, the best time to negotiate a debt settlement agreement is when the creditor is essentially ready to write off the debt. If the creditor is in a situation where they are assuming that they will receive nothing from the debtor and will make only pennies on the dollar from selling the debt to a debt collector, the creditor will be much more likely to accept a settlement offer from the debtor.

Accordingly, if you are only a month or two behind on your payments, now might not be the best time to settle your debt. If you are farther behind but the creditor has not charged off your debt yet, it may be the perfect time to negotiate a debt settlement agreement.

You Would Owe More Than You Can Afford in Taxes

Any amount of debt that is forgiven by the creditor will be taxable. What this means is that you will need to pay income taxes on the amount of debt that was forgiven, as if that forgiven debt were income you earned.

For most individuals, the tax burden of forgiven debt is worth settling the debt. However, if the tax burden is so high that it will merely result in you getting into debt again, it might make sense to wait on a debt settlement negotiation until you have more funds to be able to account for taxes.

Contact a Lilburn Debt Settlement Lawyer for Assistance 

Does debt settlement seem like the right choice for you? If so, it is critical to discuss your financial circumstances with a lawyer who has experience negotiating debt settlement agreements. We want to make certain that you are able to have a fair debt settlement offer accepted by the creditor. In some cases, the timing of debt settlement negotiations can affect the ultimate agreement that is reached between the creditor and debtor, as we explained above. To find out more, contact one of the experienced Lilburn debt settlement attorneys at Konn Law Firm LLC today. We are here to assist you with all aspects of debt settlement negotiations and to answer any questions you have about the process.

Source:

cbsnews.com/news/when-to-take-a-debt-settlement-offer-when-not-to/