People who have a significant amount of credit card debt, medical debt, or other types of consumer debt may be considering enrolling in a debt settlement program or attempting to negotiate a settlement on their own with their creditors.
Debt settlement explained
Debt settlement, particularly credit card debt settlement, is essentially shorthand for when a person agrees with their creditor, or creditors, to make a lump sum or term payment covering a percentage of their current debt balance, along with fees and finance charges, in exchange for a portion of the debt balance being wiped away and, eventually, a lower monthly payment.
Your debt must be amenable to a settlement arrangement. A debt settlement agreement may generally be used to discuss various sorts of unsecured debt. Examples of unsecured debt that are eligible include:
- Credit card debt
- Personal loans
- Medical bills
What isn’t on this list is “secured” debt, which is defined as debt backed or secured by a sort of collateral that helps the lender decrease risk. A prominent example of a secured debt that is often ineligible for debt settlement is federal student loans, which are held by millions of people. Other types of secured debt are:
- Child Support
- Tax liability
- Auto Loans
Debt settlement is essentially a negotiated repayment plan in which you pay a lump sum or term settlement to a creditor in return for a portion of your debt balance being forgiven.
- Debt settlement is not for everyone. For example, in order to qualify for debt settlement, your account must be in default or you must be experiencing financial hardship.
- Forgiven debt is considered taxable income by the Internal Revenue service.
- Landmark Legal can simplify the debt settlement procedure.
Who is Landmark Legal?
Landmark makes it easy to fight with debt collectors. You can use Landmark Legal to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.