If the first plan to solve your debt problems is debt relief, what will be your back-up plan? What happens if your situation changes? You need to consider all the angles when you look for solutions to debt problems. Read further to see what options you have after plan A.
What really is a debt relief program? This type of program is basically a settlement between you and your lender. Typically they are agreeing to take less than you owe in exchange for a structured settlement. A structured settlement is usually 3 to 4 years, a reduction in principal around 50%, maybe elimination of any late fees or penalties and then your off the hook when the plan is completed.
Is it always this simple? Not always. You will here the stories of collectors still harassing you at home, the debt company not forwarding your payments to the proper places and your credit score dropping like a rock. You may be over promised things just to get your business and then find out not all is true.
The truth is unless you negotiate every little detail you can expect the following to happen.
- Your Credit Score Will Drop – this is not uncommon. You have defaulted on the original terms even though you have a settlement in place, not uncommon.
- Lender Still Calls You – unless specified in the agreement the lender still has the right to stay in touch with you. Big banks are more likely to back off a little compared to collection agencies. These agencies have been known to break the rules and the laws in pursuit of the debt.
- You Didn’t Settle With All Your Lenders – the lenders who would not settle can still come after you. To make a debt relief plan work you need all the unsecured lenders on board.
If your situation changes and you can’t adhere to the debt relief plan, what is plan B? You have two options you should first try for a 2ND negotiation due to your situation changing. Lay out the facts and the evidence to all the lenders and see what they say. If this is a short term bump in the road you have a good chance they will bridge the agreement for a few months. The bottom line is if you can’t pay, you can’t pay!
If this doesn’t work be prepared to file for bankruptcy. Chances are if you had the principle reduced in half and you still have problems you will need the courts protection.