Debt settlement is an outstanding debt relief option for many people. However, after you’ve decided to take the plunge and resolve your debt through settlement, you may feel unclear about what to expect during the program.
We’ve taken our experience helping thousands of people get out of debt and created a behind-the-scenes look at our program at various points in the process. Follow along with our timeline to preview a debt settlement journey based on data from a real client.
Put Yourself in Our Client’s Shoes
Imagine you have four accounts and a total enrolled debt of $32,488. Our program will reduce your monthly payments from $1,300 to $700. We will settle your debt in 36 months for $25,195 (including fees.) Compare that to the $62,172 the client would have paid had they continued to make monthly payments directly to their creditors over a much longer timeframe.
Debt Settlement vs. Making Minimum Payments
Month 1: Enrollment
Getting Off To A Good Start
Our most successful clients get off to a good start by completing a few tasks outlined in our Welcome Kit. After completing enrollment, we walk you through the kit and a few important to-dos. We will also answer your questions about the program.
All of these tasks are necessary, but we like to place particular emphasis on delaying payments to your creditors and making monthly deposits into your Dedicated Account. The money you save here is essential to powering your debt settlement and, with your approval, is used for settlement payments to creditors and your program fees.
☐ Decide to stop paying your creditors until a settlement is reached
☐ Stop using credit cards enrolled in the program
☐ Mark calendar with Dedicated Account deposit dates
☐ Store our number in your phone, so you know we are calling
☐ Block creditor calls
Month 4: The First Settlement
Four months after starting the program, we get you your first settlement. We negotiate with Chase to settle a $2,613 credit card balance for $1,195 which means you pay 46% of what you originally owed.
At this point in the program, your main focus is making your monthly deposits on time while we do the rest! That includes handling all creditor calls and communications, keeping an organized record of every conversation we have with your creditors, negotiating settlement offers, and getting you the lowest settlement possible on each of your enrolled debts.
Month 8: Second Settlement
Eight months into the program, you get your second settlement and may notice a drop in your credit score. Many clients see a decrease in their credit score when they delay payment to their creditors and begin building their Dedicated Account. This empowers you to control your money and ensure that it fuels your settlements instead of being eaten up by interest and fees.
Fortunately, paying off your debt can positively impact your credit health in the long run.
Did you know your payment history accounts for about 35% of our overall score? Our program helps you with the other 65%, including your debt-to-income ratio!
Month 13: Third Settlement, Credit Score is Improving
By month 13, you are more than halfway through the program with three successful settlements and are making significant progress. Your debt to income ratio lowers, which raises your credit score from 550 to 620. Because your monthly deposit is lower than what you used to pay on minimum payments, you have more money on hand each month that you can put toward other financial goals.
Month 24: One More Settlement To Go
Two years into the program, three of four creditors have agreed to settlements, and regular payments on each are being dispersed from your Dedicated Account. You’ve seen considerable improvements to your credit health and are less stressed about money than you used to be. Making regular deposits into your Dedicated Account gives you confidence in your ability to manage debt in the future.
Month 30: The Last Settlement
Once a settlement offer is approved, it typically involves agreeing to a payment plan. For example, your last settlement resolves a $13,590 personal loan for $6,656, which is paid to the creditor from the Dedicated Account in 18 payments of $370.
You don’t have to manage those payments manually because your Certified Debt Specialist does it for you. You simply need to keep making your monthly deposits, which by now is a comfortable routine.
Month 36: Graduation
By the time you reach your graduation, you have had three years to build your confidence, practice good financial habits and plan for the future. Most of our clients are excited about completing the program but feel that they have reaped the rewards of debt relief long before their graduation is official.
Making Debt Relief Work For You
Everyone’s experience with debt settlement will be unique, but we know that our most successful clients do these three things:
- Make regular deposits
- Practice good financial habits
- Communicate questions and concerns with the Beyond Finance Client Success Team
We are here to help and be a resource for you every step of ensuring that your debt settlement journey is a success.