If you are struggling with heavy credit card debt, you owe it to yourself and your family to explore your debt relief options and find ways to manage your debt. You can choose from balance transfer cards to debt consolidation loans and debt management plans offered by debt counseling agencies. However, debt settlement can be the best option for you if you wish to pay back less than you owe. The sooner you settle your credit card debt, the lower interest rates you'll get, the easier you’ll pay down debt, and the sooner you can find your way to true financial freedom.
The debt settlement process is an attractive option for many people who have a serious amount of unsecured debt with high rates, such as credit card interest rates. Unlike some other forms of debt relief, debt settlement saves you money by potentially reducing the principal amount you owe, so that you can settle your debt for less.
How Much Money Can Debt Settlement Really Save You?
According to a May 2020 report about financial outcomes for debt settlement plans by Will S. Dobbie of the Harvard Kennedy School:
- Every $1 you pay in debt settlement fees to debt settlement companies results in an average of $2.67 of debt reduction for you.
- On every settled account, debt relief companies save an average of $1,700 after fees.
- Total program savings per individual, with an average of 6.68 accounts associated with debt per individual, amount to around $5,800 after fees, on average.
- After the settlement payments and debt settlement fees, individuals get a write-down of 33.2% on average, on settled accounts.
Debt relief programs can save you money, but it's important to understand that their results can vary widely, as some debt relief methods may affect your credit score. For example, compared to other debt-relief options, such as getting a debt consolidation loan or agreeing on a debt management plan, debt settlement is the only type of debt relief that can lower the total debt you owe.
You have to weigh the pros and cons of debt relief methods, including the cost of debt relief. Consulting with the best debt repair companies or understanding options from the Internal Revenue Service, can help you decide which type of debt relief can get the best results for your situation, types of loans, and goals.
Managing your money and debt consistently, especially when we are talking about thousands of dollars, and using a debt relief company is the key to reducing the risks of debt, ensuring long-term success, and helping you make a lasting change in your financial situation.
Debt Settlement Outcomes
(Source: Dobbie Report)
In this chart, we used time frames of 13.81 months on accounts and 12.04 months on individual statistics for different amounts of debt. The chart makes it clear that while your debt balance goes up during this time due to interest and late fees, you end up paying back significantly less.
With a starting balance of $4,667.80, on a single account, you will see your balance go to $5,174.93 after 13.81 months, but you will only pay $2,437.79 on the original balance. For this principal reduction, you pay your debt settlement company $1,018.36. Clear One Advantage does not charge upfront fees. You will pay debt settlement fees only once you have reached a settlement on your debt and the creditor has received a payment.
How Much Can You Save with Debt Settlement?
Thus, your debt reduction will be $2,737.14. Since you pay the debt settlement company $1,018.36 for its services, you may be able to achieve savings of $1,718.78.
Remember:
- These are hypothetical numbers, resulting from a scientifically conducted study that has averaged out all the variables used in the calculations. In your particular case and for your amount of debt, the numbers may differ somewhat. Talk to a ClearOne Certified Debt specialist for specifics.
- You also need to remember that forgiven debt may carry certain tax obligations.
What You Should Also Know About How Debt Settlement Works
The numbers above were drawn from debt settlement enrollees who participated in a program for at least 36 months. The longer you stick to the debt relief program, the better your results will be.
If you stay enrolled for 36 months, you will likely settle 3.37 accounts, covering around 51 percent of your enrolled debt during this time.
- More than half (54%) of debtors enrolled in debt settlement resolve around half of their total debt during their first 36 months.
- Some do better: 37% resolve 75% of their debts during this time.
- Those focused on getting out of debt may resolve 100% of their debts in 36 months. Some 18 percent of enrollees fall into this category.
How much money can you save with debt settlement services? It depends on the level of your indebtedness and the number of accounts you have. You should know that post-enrollment statistical data on debt settlement outcomes favors those with more debt.
If you are considering debt settlement, then it is time to hire a debt settlement company to settle your debt. Our professional debt specialists will negotiate with creditors on your behalf.
Start tackling your debt today. To learn exactly how much you can save through debt settlement, talk today with a ClearOne Certified Debt Specialist at 866-481-1597 and get a free savings estimate!
