Who is eligible for debt settlement? Know the criteria

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:

  1. Credit card debt
  2. Personal loans
  3. 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:

  1. Mortgage
  2. Child Support
  3. Tax liability
  4. Auto Loans


Important Takeaways

 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.

  1. 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.
  2. Forgiven debt is considered taxable income by the Internal Revenue service.
  3. 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.


From America’s #1 Debt Relief Company

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