Debt Settlement

Understanding the Risks of Debt Settlement

Debt settlement is a great option for getting out of debt that is very popular among people who are in serious debt trouble. It involves negotiations with their creditors to arrive at a settlement amount (usually 40-50% of what you owe) that is much less than what you actually owe. Once you come to such an agreement, your creditor will write-off the balance of what you owed at the time.

However, debt settlement carries risks:

  • Your credit score will go down once you default with your creditors. It will improve once you settle all of your debt.
  • Completing a debt settlement can take a long time (2-5 years for most people).But it’s much shorter than Credit Counseling, Chapter 13 Bankruptcy or if you keep paying your minimum payments. It could take you 5-20 years to get out of debt this way.
  • Creditors will call you sometimes every day trying to collect what’s owed to them. We tell you to block their phone number so that you don’t talk to them.
  • You could be sued by a few of them depending on who you owe the money to. We always settle or setup a payment plan with them before they try to sue you. Most people don’t want to get sued so we always settle with those creditors first.

How the process works

Debt settlement applies to most of your unsecured debt (credit card & store cards, personal loans, medical bills, if you have a vehicle repossession or private student loans). Most of the time there’s a loss of income (job loss, business failure, divorce, medical problem or just unable to keep up paying your minimum payments anymore).

Your scores for your credit cards and loans will plummet. You’ll feel overwhelmed, far behind and your monthly income can’t cover your ongoing debt service on the current terms.

Debt settlement companies intervene on your behalf to negotiate with your creditors to lower your debt which will improve your credit score. Of course, you won’t be able to use a settlement firm for every type of outstanding debt. Debt settlement doesn’t work for secured debts, such as a home that can be foreclosed on or car that can be repossessed if you don’t pay. You also can’t include IRS debt or Federal Student loans. If you’re struggling financially you have 3 options for getting out of debt (Credit Counseling, Debt Settlement or Bankruptcy). Credit Counseling only lowers your interest rates where Debt Settlement lowers your minimum payments and debt amount by 50-60%. Most people only use Bankruptcy as a last resort.

By offering a settlement, you show that you are unable to pay any of your debts, making you less attractive to creditors. Currently around 3-5% of people are late in some way with there creditors. Instead of paying on your debt, you put a monthly payment into a savings account. Once the settlement company believes you have enough for a lump-sum offer, they negotiate with the creditor to accept a smaller amount.

Risks for debt settlement

We always suggest using debt settlement as a great option for getting out of debt, the final call is always up to you. But, don’t take our word for it. Ask yourself if using debt settlement is your answer after carefully weighing the pros and cons and determining if it’s really worth the risk.

“Here are potential downsides to getting out of in a debt settlement program”:

Your credit score will suffer but your credit score is already suffering if you owe more than 50% on any of your credit limits of your credit cards. Your credit score will be significantly lower (an estimated 100-150 points below average), which can take years to restore. Always use your credit first by buying the house or the car before you start a debt settlement program.

Penalties will start accruing to your balance, and interest will continue to rack up, adding to the total balance. Your creditors are allowed to charge you late fees and interest until the account charges-off (when you’re six months late).

Before you sign up for a debt relief program, you should understand what the fee structure will be. Most of them charge 20-30% of the debt amount.

You’ll pay additional fees: Most of the Debt Settlement company’s charge fees for setting up a dedicated account in the program and monthly maintenance fees for the account along with fees to pay your creditors each time an account is settled. We let you hold the money in your Savings account to settle with so there’s no additional bank fees.

Forgiven debt is generally considered to be taxable income by the Internal Revenue Service (IRS). You might want to talk to an income tax specialist about your additional IRS responsibilities. You’ll receive a 1099-C on the forgiven portion of the debt. Most people don’t have to pay taxes on the forgiven portion of the debt as long as you’re insolvent and you file form 982 with your taxes.

It is important that you make sure you have all the facts before hiring ANY company who offers to help with your financial situation. Remember, if the offer sounds too good to be true, it usually is.

For borrowers who are overwhelmed by unsecured debt such as credit cards, consider how your options compare to, for example, bankruptcy (chapter 7 and 13). If you’re unable to pay off your debts in a timely fashion or earn enough to service your debt, you’ll likely face several consequences and should explore your options. Generally, if there’s no way to pay off debts within a reasonable amount of time, you’ll have to explore alternatives. If filing for bankruptcy is out of the question, for example, you may decide to consider doing a debt settlement program which has been around for over 30 years and have helped millions people avoid bankruptcy.

Don’t work with companies that tell you to make claims under specific laws or that suggest you lie on your forms. Many debt settlement companies make promises about what they will do, when in actuality; they can’t do those things. These companies also promise to have your debt “declared invalid.” Don’t work with these companies. The FTC could bring a law enforcement action against them.

If you don’t have the funds to pay your debt, use a debt settlement company to help you negotiate with your creditors. This is something that you don’t want to do yourself. The debt settlement company will usually get you better settlements than you could receive yourself. We’ve been helping consumers for over 17 years get out of debt this way and our owner has been doing debt settlement for over 25 years longer than almost every other debt settlement company.

How to Commit to Achieving Financial Stability

Achieving financial stability is more than just resolving to get your finances in order. It takes commitment and time to develop new habits that will change the way you think about money. Bright Credit discusses the ways you can commit to achieving financial stability and the resources available to help you.

Understand your options.

When you are struggling with debt, it can be difficult to keep your head up and know that there is a light at the end of the tunnel. It is important to know that there are options available to help you in achieving your financial goals. Debt settlement is one of many debt relief options that has the benefit of settling for less than the amount you owe. There are also credit repair programs to improve your score after working hard to lessen your debt. Understand that you do have options, but they will require hard work, dedication, and time.

Take advantage of free consultations.

Other companies have no problem charging for their advice and turning you in the wrong direction when discussing financial possibilities. Pay attention to free consultations and customer service to make the most of your research process. When searching for a debt settlement company or debt relief solution, you most likely will not pick the first company you find online.

There is an abundance of companies that willingly charge unrealistic prices for their services and lead you to less-than-desired results, if they deliver at all. When a company offers a consultation for free, then you have an opportunity to explore your options without any obligations to start a debt relief program.

Look for transparency and trust.

In today’s world, trust can be hard to come by, especially when companies and individuals make empty promises. Work with a company that has proven experience and is transparent about their process. The internet has made it effortless to find honest reviews left by real people explaining their experiences.

Most companies now outsource their credit negotiations and/or their customer service. These companies tend to focus more on sales and less on customer service. On the other hand, Bright Credit handles everything in-house and does not depend on outsourcing to shape your financial future. We have over 20 years of experience settling debt and getting our clients the results they deserve.

Review the pros and cons.

Before beginning any debt settlement program, you should review the impact it will have on your finances and if it is a feasible option. A good debt settlement company will review both the risks and rewards of the ideal program for your financial situation. As not all programs and debt reduction options are built the same, it is crucial to choose the best one based on your needs.

It is also crucial to do some research. Pay attention to the way a debt settlement company talks about the process. When settling debt, you start with the largest accounts and work down to the smaller ones, but most inexperienced companies do it the other way around.

Bright Credit understands how to maximize the customer experience while saving you money. We also have vast experience working with creditors, which gives us an advantage in settling the accounts with the most aggressive ones first. Our mission is to put our clients first and we openly review the pros and cons of the options we present you.

Bright Credit, LLC has helped thousands of consumers and businesses become debt free and improve their credit. Contact one of our customer advocates for a free, confidential consultation to learn more about the best option for your financial future.

How We Help Individuals and Businesses with Financial Freedom

Creating a brighter financial future for yourself or your business requires dedication, hard work, and a positive attitude. Regardless of where you are in the country, you can achieve your financial goals with the right debt settlement company. Bright Credit reveals how we help consumers and businesses accomplish financial freedom, so they can focus on what they do best.

Our Approach

We prioritize education and success over sales. Our team believes there is more power in educating you on all of your options instead of trying to tirelessly sell you on a program that may not be the best fit for you. We are upfront about the benefits and downsides to your debt relief options as well as the commitment it will take to succeed. Communication and honesty are our key principles in doing business. We want to provide you with the best experience possible because we know there are several debt settlement companies that unethically conduct business. We are not one of those companies.

Developing Trust

It can be hard to develop trust with a company you have never worked with before, especially because debt relief receives a mediocre reputation in the financial industry. Our success stories and referrals can attest to the great work that we do. You are not obligated to start a program or hand over your hard-earned money after the first call.

We offer a free consultation to get a better understanding of your needs and goals. The consultation is also confidential; we are happy to answer your questions and concerns without expecting names or specific details about your situation. Whether you need more information about credit card debt, credit repair, private student loans, or any credit-related topics, we want to help you in any way we can. You can look forward to no pressure and no obligation to start a program because our team is not comprised of sales associates. With over 20 years of experience as debt settlement and credit repair advocates, we are in the best position to help you begin your journey to financial success.

Distance Doesn’t Matter

We are only a phone call away to helping you develop a brighter financial future. Bright Credit helps consumers and businesses because we believe in providing financial assistance regardless of your zip code. We develop a strategy designed to get your financial burdens resolved; your position in the world does not hinder the progress we make on your behalf.

Knowing Your Options

Bankruptcy is a last-resort option that can create long-term financial damage. We don’t want to encourage you to take this road. Rather, we help people just like you settle your debt quickly, affordably, and efficiently. All you need to do is commit. We know it can be a hard step to take and hard call to make, but we stand with you during the entirety of the program.

Bright Credit, LLC has helped thousands of consumers and businesses become debt free and improve their credit. Contact one of our customer advocates for a free, confidential consultation to learn more about the best option for your financial future.

How to Keep Your Finances on Track for College

It’s a common topic thrown out in the news, media, and conversations with colleagues: the burdensome nature of student loans. With national student loan debt totaling $1.52 trillion, it makes perfect sense why students struggle with their finances when they move on from college and are introduced to the “real world.” Bright Credit offers our best tips to help students keep their finances on track for college to avoid the burdensome nature of debt once they receive their diploma.

Developing Money Management Skills

The sooner you start developing effective money management skills, the quicker you can begin using them. The goal of developing these types of skills during college is to prepare you for the future. A few things you can do to manage your spending are preparing your own meals, carpooling with friends, buying used books online, and selling your gently-used items or clothes from last season. When you pay attention to the money entering and leaving your account, you are more aware of what you can afford each month.

Taking Advantage of Incentives

Some loan servicers offer incentives if you make payments on your student loans while still in school. As students are usually not required or obligated to make payments on their loans if they meet the loan servicer’s requirements, contributing to your loans while in school can offer benefits. For instance, some borrowers can expect a slight decrease in their interest rate for enrolling in autopay. Note: benefits and incentives will vary based on loan servicer. Do some research to see if there are steps you can take while you are in school to reduce the amount you owe.

Paying Attention to the Details

It can be easy to overlook the details when you are juggling school and other financial responsibilities, but it is crucial to pay attention to them if you want to save money. Some students receive reimbursement checks if they have leftovers from their loan. If you can afford to put these checks back into your student loans, then this can immediately reduce the amount you owe. It can decrease your principal and can help your loans avoid collecting even more interest.

If you can commit to paying a small amount toward your loans monthly, then this can also lessen the amount you owe and keep interest costs low. Take a look at your interest rates. Regardless of how low they may seem compared to credit cards, once interest starts collecting, it can be tough to make the monthly payments affordable. Even if you are not required to make payments while in school, it can help you control the amount you have borrowed and set your financial future up for success.

Make a Budget

Map out your expenses by recording your income and recurring expenses. Do you notice a pattern in your finances that you need to budget for? Do you need a part-time job while in school? Asking these questions and developing a plan can help you learn valuable time and money management skills. Rather than mindlessly spending money, become more aware of your finances and smoothly make the transition into adulthood. College can still be fun and memorable on a budget. Developing long-term spending and saving habits will play a role in shaping your financial future and being more conscious about how you spend your money can make the payoff worth it.

Bright Credit, LLC has helped students and college graduates resolve their private student loan debts. Contact one of our customer advocates for a free, confidential consultation to learn more about the best option for your financial future.

Shopping Strategies for Buying Clothes on a Budget

Clothing can be one of those challenging costs to calculate in a budget, especially when you don’t stick to a regular buying schedule. When you are struggling with your finances, discerning if you really need new clothes can be a tough call. You also shouldn’t deprive yourself for the sake of your finances. Deprivation can contribute to impulse spending. How can you save money on clothes while staying on track with your finances?

Third-Party Apps

Technology has given shoppers the ability to purchase items online, search for the best prices, and skip trips to the mall altogether. In fact, according to Statista, “Online shopping is a thriving market. Retail e-commerce sales worldwide are forecast to nearly double between 2016 and 2020.” Several brands are creating more online-exclusive items, offering less of a selection in stores. Depending on the company, some stores may not be able to afford keeping more stock on the shelves if a large portion of their sales derives from online purchases. There are also plenty of third-party apps dominating the market right now that make buying and selling your clothes easy. You can avoid the mall—and spending more money—by scouting for the best deals online.

Last Season’s Wardrobe

In using these third-party apps to purchase clothes for much cheaper than their initial selling prices, you can also sell clothes that have been collecting dust in your closet along with other items. When you start earning money for last season’s clothes then you can begin purchasing new ones with those funds. Rather than dipping into your savings or account or spending extra money, you can utilize these apps to keep your budget steady. It will take some time, but the payoff could be worth it depending on how many items you have available to sell.

Friends and Family

They say the best things in life are free, right? If you have a friend or family member who wears the same size as you or anyone in your family, then ask to take a peek at the items they are planning on getting rid of. Close friends and family are usually happy to help out in small ways, especially if it means helping you keep your finances on track.

Plan Ahead of Time

The holidays are just around the corner, which means holiday parties and events are too. Some of these parties may require festive or cocktail attire, which means finding an affordable outfit could be a challenge. Stop by secondhand shops, look for good deals online, or keep an eye out for coupons in the mail to find the best outfit for the occasion. Try to look for clothes that you may be able to repurpose or wear for other events.

Some third-party apps also offer clothing rentals, which allows you to rent stylish clothing without paying full price for the item. If you know you will only wear the outfit once or twice, then these types of apps may be worth looking into. The most important thing you can do is plan ahead to ensure you save the most money. Buying last minute items can often cost more, especially when you miss out on the best deals.

Bright Credit, LLC has helped thousands of consumers and businesses become debt free and improve their credit. Contact one of our financial advocates for a free, confidential consultation to learn more about the best option for your financial future.