Van Nuys Debt Settlement Lawyer
Struggling with debt you cannot afford to repay is a very stressful situation. You may feel hopeless and as though you do not have any options. Fortunately, that is likely not the case. You do have legal options that can lower the amount of debt you owe and make it more affordable to repay. Below, our Van Nuys debt settlement lawyer explains more.
What is Debt Settlement?
Debt settlement refers to negotiations that take place between you and the creditor or debt collection company you owe. You can negotiate any term of your debt including the overall amount, the interest rate, and your monthly payments. By negotiating for a lower interest rate or monthly payment, the debt becomes more affordable to repay and can help you avoid legal action being taken against you.
Debt settlement is not the same thing as debt consolidation. When you consolidate a debt, you take out a whole new loan that will cover the cost of your current debt. You use the consolidation loan to repay the debt and then just have one loan to pay instead of several. It is generally recommended that you settle your debt rather than consolidate it, if possible. With debt consolidation, you will not necessarily pay a lower amount while with debt settlement, you will.
How Much Will Debt Settlement Lower Your Debt?
No two cases are exactly alike, but the potential savings in the interest rate alone can be significant. The majority of borrowers in a debt crisis pay more than 24 percent in interest. This means that if you owe $5,000 and pay $100 a month, you will only cover the interest. If you can negotiate that same debt to $3,600 over a period of three years, you can pay $100 a month and eliminate the debt entirely without incurring substantial interest.
Will Creditors Settle Your Debt?
Creditors are hesitant to negotiate a debt settlement if they believe you have the ability to repay it in its entirety. Due to this, your debt must be seriously delinquent before a creditor will agree to settle it with you.
If you know that you cannot afford to repay a debt and want to pursue a debt settlement agreement, it may be better to stop making payments on it. Although this certainly sounds counter-intuitive, you will likely have to make a lump sum payment when a settlement is reached. By stopping payments now, you can save additional financial resources you can then use as part of your lump sum payment. Additionally, a creditor will be more likely to negotiate a settlement with you if they believe you cannot pay and a lack of payments can help with this.
Our Debt Settlement Lawyer in Van Nuys Can Negotiate On Your Behalf
Many people do not have the necessary experience to negotiate a debt settlement. At Wadhwani & Shanfeld, our Van Nuys debt settlement lawyer can negotiate on your behalf so you obtain the best possible outcome. Call us today at 818-658-2669 or contact us online to schedule a consultation and to learn more about how we can help.
