What Types of Debt are Eligible for Settlement?
If you have debt you cannot repay, you may have heard about debt settlement. However, you may not understand what it entails or what types of debt are eligible for resettlement. It is important to fully understand what debt settlement is and whether the debt you are carrying is eligible to be settled before you start the process. Below, our Tampa debt settlement and relief attorney explains further.
What is Debt Settlement?
Debt settlement helps borrowers save an average of $2.64 for each dollar of debt assessed, including credit card debt, according to the American Fair Credit Council. The debt settlement process in Florida involves resolving debts that have become difficult to manage by offering lump sum payments to creditors in exchange for forgiving a portion of the total debt owed. The majority of lump sum payment offers available in debt relief cases vary between 10 to 50 percent of the total debt.
Debt settlement is not the right solution for everyone, but it can be substantially cheaper than paying off your debts in full. It can also reduce the impact to a person’s credit score than other options, such as bankruptcy. Still, there are tax implications associated with debt settlement so it is important to understand what these are before trying to settle your debt.
What Debt is Eligible for Settlement in Florida?
Generally speaking, the only debts that are eligible for settlement are those that are not secured by any property. These types of unsecured debts are not associated with any type of collateral, such as a mortgage or a vehicle. The most common types of unsecured debts settled during negotiation are as follows:
- Gas card and retail store card debt
- Credit card debt
- Car repossession debt
- Unsecured personal loans
- Private student loan debt
- Medical debt
- Past-due rent payments from past residences
- Previous utility bills from closed accounts
On the other hand, secured debts are not usually eligible for debt settlement because creditors often choose to collect the collateral tied to the debt instead. Also, any debt that cannot be discharged through bankruptcy also cannot typically be settled through negotiations. These types of debt often include:
- Current or past due rent or mortgage payments
- Past due criminal fines
- Federal debts for student loans
- Past due alimony or child support
- Gambling debts
- Back taxes
- Debts associated with rent-to-own agreements
- Past due utility bills from current accounts
Even when the above debts cannot be settled or discharged through Chapter 7, there may be other options available, such as Chapter 13 bankruptcy. Obtaining legal counsel can help you determine which option is right for you.
Contact Our Debt Settlement and Relief Attorney in Tampa Today
Debt settlement is an attractive solution for many borrowers, but it is true that it is not the right choice for everyone. At Florida Law Advisers, P.A., our Tampa debt settlement and relief attorney can fully explain your options, help you determine which one is right for you, and guide you through the process so it is as easy as possible for you. Call us today at 1 (800) 990-7763 or contact us online to schedule a consultation with our experienced attorney.
Source:
aa4dr.org/wp-content/uploads/AFCC_MythbustersOnePager10_FINAL1.pdf
