How To Create A Debt Settlement Agreement
If you're struggling to keep your head above water and just can't get out of debt no matter what you do, you should know that there are options for you. No matter how hopeless it feels, there's no debt too great to be resolved, especially if you have an incredible lawyer by your side. Before you consider bankruptcy, it's always wise to think about setting up a debt settlement plan that will help you reduce your total owed sum to a much smaller, realistic sum. But to do this, you can't afford to mess around. You have to hire the best lawyer for the job if you want your negotiations with credit card companies and student loan ambassadors to go smoothly. If you're ready to get out of debt for good, here's what you should do to create a settlement plan that actually works. The information provided here is for general information only and should not be used as legal advice.
How To Create A Debt Settlement Agreement
- Reduce The Total Sum. One of the great things about creating a debt settlement agreement is that, along with a lawyer, you'll be able to actually reduce the total figure rather than trying to endlessly chip away at inflated interest charges. Most creditors are aware that they're never going to get the full payout from loan or cardholders that are deeply in debt. Because of this, they're more open to negotiation when it comes to getting the account paid off and closed. This is where your lawyer comes in handy. Rather than having to negotiate the deal yourself, your lawyer will find a way to get your debt down to a reasonable figure that you'll be able to pay off in a few short years.
- Agree To A Final Figure. After your lawyer has spoken with each of your creditors separately, chances are you'll be looking at a drastically different figure from before. If you've had your loans consolidated, you'll be able to make a single lower payment each month. However, if like most Americans you're paying off a series of student loans, credit card bills, and mortgage payments, you'll be left with a number of smaller payments to make rather than tons of overwhelming bills piling up each month.
- Create A Realistic Payment Plan. Once you're left with a final figure for each of your loans, it's up to you to figure out what's going to work in terms of repayment. Even though you might be excited about the fact that your debt is drastically reduced, it's still important to take it slow and steady rather than trying to pay everything off quickly. Even if you've had your loans consolidated, you'll want to make sure you're not promising to pay an amount that's going to leave you broke at the end of each month. Instead, confer with your lawyer about what you can actually and comfortably afford to pay.
- Stick To It. After you've set your plan in motion, it's up to you to keep current on your loans. If you feel like you're still falling behind, don't stay silent. Work with your lawyer to figure out a plan that's sustainable and realistic for where you are financially. As long as you stick your monthly payments, there's no threat of relapsing and falling back into that familiar debt spiral. Whatever happens, make sure you keep your legal counsel in the loop at all times.
What If I Can't Afford The Monthly Payments?
If you're still finding it difficult to keep up with repayments even after you've renegotiated your debt, you should speak to your lawyer about figuring out a more sustainable way to repay your debt. Remember, even if you can't negotiate your debt down to the figure you wanted, you can choose different repayment plans that will give you the option of repaying your loans over different periods of time. While you'll still have to pay off interest, it might be worth it just to deal with a more sustainable monthly payment that won't end up stressing you out. If you get a raise or a new job, you can always pay off more each month to reduce interest.
American Public Debt Trends, 1990 - 2018
|Year||Public Debt Sum in Billions|
Do I Still Have To Pay Interest?
After you renegotiate your loans, you'll still have to pay interest on the principle. However, since your debt will be reduced, so will your interest rate. As long as your lawyer is in charge of negotiations, you should walk away with an interest rate that isn't hugely inflated or impossible to pay down each month. If you feel that your interest repayment is eating up all your money without allowing you to pay off your debt, you can always choose the option of paying off the principle each month to ensure that you're actually making progress on your loans.
Breakdown Of American Debt Statistics, 2018
- From 2017 to 2018, consumer debt increased by 7.6%, creating a total of nearly $4 trillion.
- The average per capita consumer debt in 2018 is $11,880.
- Older millenials (ages 25-35) average $42,000 in debt, while baby boomers (53 and up) average $36,000.
- The total revolving consumer debt (credit cards and other per-month payoffs) rose by 11.4%.
- Credit card debt broke 2008's previous country-wide record of $1.02 trillion.
- 2 out of 10 adults admit that they have a balance of $2,500 or more on their credit cards from month to month.
- The total non-revolving debt (student loans, car loans, and mortgages) was $2.858 trillion.
- The total student loan debt accounted for $1.524 trillion, at an average of $76,468 per student.
- Credit card debt accounted for 27% of the total average debt in 2018.
If you're deep in debt, it's common to feel trapped and hopeless. With creditors calling and credit card interest rates piling on each month, it can feel impossible to get on top of your finances. However, no matter how deep in debt you are, it's important to remember that you have options. If you want to be forgiven for all or most of your debt, filing for bankruptcy is a good way to go.
However, if you want to try to shave down the principle on most of your loans and keep your credit score intact, debt settlement can be a great option. Not a lot of people know this, but if you have a lawyer you trust, you can easily negotiate with loan officers and credit card companies to reduce your debt down to a fraction of the original cost.
When Nicholas Cage was targeted by the IRS for failing to pay taxes, things looked bleak for the actor. But even though he'd spent all his money on absurd items like islands and dinosaur skulls, debt settlement helped him get things back to normal. The same thing happened to Cage's ex-wife Lisa Marie Presley, who found herself over $16 million in debt after trusting a shady financial manager and dealing with a long, painful divorce.
But even though he'd spent all his money on absurd items like islands and dinosaur skulls, debt settlement helped him get things back to normal.
If you're in a bind like Presley's, you have to take action now. Be sure to consult our quick guide on paying off your debt fast, found on this page. Simply scroll beneath this video to connect with a lawyer who will help you wipe your debt away. Want to start getting in control of your finances again? Here's what you should do.
#1: Negotiate. When New Yorker and Vanity Fair photographer Annie Leibovitz was just starting her career, things were looking up. However, by 2005, due to a ton of unfortunate events, things started on the downturn. Her long term partner Susan Sontag died, as did both of Leibovitz's parents. On top of that, she was getting ready to have a baby. Suddenly, due to bad financial planning, Leibovitz went from well-off to $24 million in debt.
In order to pay off her loans, she had to sacrifice her entire library of photographs. If you're trying to settle a debt, don't use your personal work as collateral, and never give up the rights to your work. Instead, work with your lawyer to figure out a responsible, sustainable way to get creditors to back off. If you don't want to find yourself in the same position as Leibovitz, you can't afford to wait for another minute.
If you don't want to find yourself in the same position as Leibovitz, you can't afford to wait for another minute.
On this web page, check out our exclusive guide on negotiating down debt the right way. Just scroll below this video to start working on a game plan with an experienced lawyer near you.
#2: With Your Lawyer, Agree To A Settlement. Even if you have a plan for negotiation in mind, it's important to trust your lawyer to set up a settlement agreement, especially if you have tons of different lenders to pay off. If you try to negotiate by yourself, your credit card company or loan lender could play hardball and trap you in a corner.
Don't end up like Stephen Baldwin, Alec's younger brother who is currently facing potential jail time as a result of mismanaging his debts. If you want to stay current in your repayments and out of the clink, it's in your own best interest to work with a lawyer who knows what they're doing.
Don't end up like Stephen Baldwin, Alec's younger brother who is currently facing potential jail time as a result of mismanaging his debts.
#3: Pay Off What You Can. The most important aspect of any debt settlement agreement is consistency. It won't do you any good to promise to uphold a repayment agreement that just isn't sustainable or logical. Only commit to repaying what you can from month to month rather than getting yourself in the exact same situation all over again. Rapper Kanye West has been open about his struggles with debt, tweeting in 2016 that his foray into the fashion industry had left him $53 million in debt.
Luckily, West's wife Kim Kardashian was able to bail him out. However, if she hadn't been able to pay off the money, West would have found himself in an endless debt spiral no matter how much money he made. Whether you're a celebrity or a civilian, it's important to face the reality of debt with a clear head and a great lawyer.
#4: Find The Perfect Middle Ground. Once your lawyer has renegotiated your loans based on what you can actually afford to pay each month, you'll most likely be looking at a drastically reduced figure. The important thing to do from then on is to stay consistent and keep up with payments no matter what. We're not lawyers, and this shouldn't be taken as legal advice, but if you don't want to end up relapsing, it's crucial to hire the right legal help and create a debt settlement plan that works for you.
The important thing to do from then on is to stay consistent and keep up with payments no matter what.
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