Moving Beyond the Myths of Debt Settlement

For more than ten years, I have been helping customers resolve their financial troubles through debt settlement. But what is debt settlement? If I told others I sell cars for a living, there is no need for extra explanation. It makes sense to everyone. Debt settlement does not. Most people have no idea what “debt settlement” means.

Lack of knowledge sometimes manifests into misunderstandings or myths of the business.

The reality is debt settlement is a process that can change lives in many beneficial ways. I’ve seen customers reach out to Beyond Finance for a way out when facing a significant financial hardship every day. All those harassing phone calls, pink “final notice” bills, and the nights of lost sleep disappear eventually. Financial emergencies will always happen, but when there isn’t enough – or anything at all – in the savings account, the stress cycle of debt begins, as does all those other things.

That’s why the resolution of debt is necessary for some families.

So, about those misunderstandings? If you, or someone you know, are confronted with personal debt spiraling out of control, some things are essential to understand before deciding what to do about it. Let’s move beyond the myths of debt settlement together. 

1.     Bankruptcy usually works best

That statement is one of the most egregious and harmful things to say to someone struggling with personal debt. Sure, bankruptcy can eliminate your debt quickly, but the result of that can linger for up to a decade. Debt settlement will help eliminate that personal debt, but it will still allow you to rebuild your credit in due time.

2.     I can negotiate a debt settlement on my own

Technically, that is accurate, but that’s not a reasonable solution for most. The time and energy attempting to work with each one of your creditors are exhausting. Are you still getting calls? Are you still losing sleep, time, and hair because you can’t figure out how you will pay those bills? You can pick up a phone and try to call your creditors, but they won’t make it easy. When a debt resolution company calls them on your behalf, the creditor knows that’s their chance to get at least half of the debt owed to them. Next up, sound sleep.

3.     Debt relief will take forever

Think about something: It took a while for you to accumulate all that debt. And although it all seemed to fall on you at once, it wasn’t an overnight surprise. That’s why debt relief requires commitment and time. The negotiation, monthly allotments, and payment of unsecured credit card debt will usually take at least 24-48 months. However, once that process has begun, you can breathe easier and focus on the future.

4.     Debt resolution can take care of all your debt

There are two types of debt – secured and unsecured. The only difference is what the debt gave you. Do you have collateral for that debt, like a home, car, or higher education? That is “secured.” Your debt created by credit cards? That is all unsecured debt, which can be discharged through settlement.

5.     A debt resolution plan will impact my credit

Impact on credit is more of a misnomer than a myth. If you have a FICO credit score above 689, that is considered fair, which may be a significant sacrifice for a client. For debt settlement negotiations to be fruitful, you must stop paying the countless minimum payments, which will harm your credit. By the time people get to the point where they consider a debt settlement company for help, they aren’t worried about salvaging a FICO score hovering right above 600. And this is temporary, so rebuilding credit is possible. 

6.     It only works for a few people

Again, this kind of misleading conversation is harmful to people who are in dire financial straits. The Harvard Kennedy School released a report in January 2021, sharing 74% of every person enrolled in a debt resolution program settles at least one account successfully. If you notice a difference with one account, I will encourage you to stay enrolled and claim your life back.

I am the first person to advise debt settlement may not be for everyone, but it can be the best solution for many struggling with debt today. Most Americans want to pay back their debt, but some just can’t with their current resources. Having a debt settlement company guide them through the process and negotiate their behalf allows their resources to work and begin to etch away at the mountain of debt in front of them.