What Is Debt Settlement? | ClearOne Advantage

If you are like millions of Americans struggling under the weight of credit card debt, you may feel that your life has spiraled out of control. You can take control back by exploring your options for credit card relief. One smart option to consider is debt settlement.

What is Debt Settlement?

Debt settlement is a debt relief option that involves working with your creditors to create a debt reduction plan. ClearOne Advantage will negotiate with your credit card providers to agree to accept payment for less than you owe and consider your entire debt paid in full.

Sometimes called debt resolution or debt reduction, debt settlement is not a loan and it is not a form of bankruptcy. It is an agreement between you and your creditors to reduce the amount of debt you owe.

Some who choose to pursue this credit card relief option see their debt reduced by as much as 50 percent before fees.

How does debt settlement work?

When you decide to explore the option of debt settlement, you will likely want to work with a company that specializes in negotiating with creditors on your behalf.

DIY debt negotiation is an option, of course, but it's not one that most people choose. That's because negotiating with your creditors directly requires great negotiating skills and a lot of time, patience, and effort. To do this yourself, you would need to contact each of your creditors directly, enter into negotiations to reduce your debt with each creditor separately, and obtain a written agreement from each creditor that clearly outlines the terms of your settlement.

Working with a trusted debt settlement company can help you streamline this process and get the best possible debt reduction outcome. ClearOne Advantage is a proven leader in the debt settlement industry, with a skilled team of certified debt specialists to work on your behalf.

When you work with ClearOne Advantage, here’s what to expect:

The process starts with a free, 20-minute consultation with a debt specialist who will review your situation and customize a plan to meet your unique needs.
You will have time to review and approve the plan.
You will begin making deposits to an FDIC-insured escrow account that you will control.
Once sufficient funds have accumulated in your escrow account, ClearOne Advantage will contact your creditors to begin the process of settling your debts.

4-steps Debt Settlement

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Why would creditors accept less than what they are owed?

While it is true that creditors are not quick to simply accept less than is owed and call it even, it is in the best interests of the creditor to accept what you can reasonably give rather than potentially getting nothing at all.

When your debt specialist explains to your creditors that there are limited funds available to resolve your debt, many creditors will realize that they are now in the position of competing for those limited funds with other creditors. Negotiating a reduced amount will help a creditor recoup a portion of the amount owed and help you find financial relief.

How does debt settlement compare to other debt relief options?

There are a number of other debt relief options from which to choose, such as:

Credit Counseling
Debt Consolidation Loans
Chapter 7 Bankruptcy
Chapter 13 Bankruptcy

Here’s a quick comparison of some of the factors to consider with each type of debt relief.

	Debt Settlement	Credit Counseling	Debt Consolidation Loan	Bankruptcy
Credit Score	No minimum	No minimum	Generally above 600	No minimum
Qualifications	$10,000 in unsecured debt	$2,500 in unsecured debt	$5,000 in unsecured debt, good credit	Must document income, expenses and assets to court to prove you are unable to pay your debts
Upfront Fees	$0	$0 - $50	Potential origination fees of 1%-5%	Attorney fees of $500 - $3500
Financial Benefits	Short-term relief with a low monthly payment Long-term relief with reduction in total debt repaid.	Modest debt relief by lowering interest and fees Average term under 60 months	May provide a lower monthly payment and the convenience of a single monthly payment. Average terms under 60 months.	Stops collection procedures Usually allows you to keep primary assets although you may have to forfeit some non-essential assets
Credit Impact	Significant, but less impactful than bankruptcy	Low	Low	Severe – lasting 7 to 10 years
Other Factors to Consider	May reduce original debt load by half	Missing a payment can result in the loss of program benefits	Could result in paying more interest over the life of the loan	Irrevocable. Need to be current with tax filing and undergo credit counseling before filing

Learn more about these debt relief options by downloading our Debt Relief Guide

Pros and Cons of Debt Settlement

Each debt relief option comes with its own advantages and disadvantages. It’s important to consider both sides of the equation when embarking on your journey to financial freedom. Here are some of the pros and cons of debt settlement.

Pros

One plan payment per month
Payment is significantly lower than your minimum credit card payment currently
No upfront fees for the service
Resolution of your debt in as little as 48 months
Consumers save an average of $2.64 for every $1 spent in fees to a debt settlement company, according to an American Fair Credit Council report on the subject.

Cons

Creditors may intensify collection efforts prior to reaching a settlement agreement.
Some creditors may threaten legal action.
Debt settlement will affect your credit score, but not as negatively as a bankruptcy.

How much can you save with debt settlement?

To understand the potential savings that debt settlement with ClearOne Advantage can deliver, you must first understand how credit card debt works. To illustrate, consider the case of Joan.

Joans story-1 (2)_1200x

Why Debt Settlement

Are these figures reflective of reality? They are, as illustrated by these highlights from a 2020 report commissioned by the American Fair Credit Counsel:

ClearOne Debt Settlement Graphic

Will debt resolution impact your credit score?

The simple answer is “yes.” Debt resolution will have a negative impact on your credit score, but it’s not as bad as bankruptcy, which stays on your credit report for seven years.

When you are considering how to achieve freedom from crushing credit card debt, it is important to keep your eyes on the ultimate goal. Pursuing a debt settlement plan with ClearOne Advantage will have an impact on your credit score for a time, but in the long run, letting our team of dedicated debt specialists negotiate on your behalf will help you get your finances under control. Low credit card balances can improve your credit score over time.

Even better, working with ClearOne Advantage can help you alleviate the stress and worry that comes with a heavy financial burden. We want to see you succeed, and our team is dedicated to doing what it takes to help you find financial freedom and relief.

What should you look for when choosing a debt settlement company?

When choosing a debt settlement company, you want to find a company like ClearOne Advantage with a proven track record of helping consumers get out of debt. ClearOne Advantage:

Has helped thousands of consumers who were struggling with unmanageable levels of debt.
Does not charge settlement fees until you have reviewed and accepted a creditor’s settlement offer.

Has a 100% satisfaction guarantee.
Has a team of debt specialists and negotiators dedicated to your success.
Is committed to providing you with the tools and resources to live a life free from the burdens of debt.

Let ClearOne Advantage Help You Defeat Your Debt the Smart Way

If you are living with the constant stress and heavy burden of credit card debt that is out of control, we can help. With over 7,500 ratings on TrustPilot and having helped thousands of customers who were struggling with debt, ClearOne Advantage has the knowledge and skill to assess your financial needs, develop a specialized debt relief plan to meet those needs, and negotiate with creditors on your behalf.

We want you to be free of debt in the shortest possible time. Together, we can help you build a bridge to financial freedom. Defeat your debt the smart way. Find out how.

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I wish to thank you for all of your agency support and encouragement. The last two months have been very stressful due to the accounts going legal. It has been also very rewarding to get through this process and have a good grip on our future and we have started this planning and example for our children.

Joseph and Michele, PA

ClearOne Advantage, LLC is a debt settlement company, not a lender, loan broker, creditor, credit services organization, or debt collector. ClearOne Advantage, LLC does not assume or pay any debts; receive, hold or control funds belonging to consumers; or provide bankruptcy, legal, accounting or tax advice. You should review full program terms and conditions before enrolling. To the extent that any aspect of the debt settlement services relies on or results in the consumer’s failure to make timely payments to the consumer’s creditors or debt collectors, the use of the debt settlement services: (1) Will likely adversely affect the consumer’s creditworthiness; (2) May result in the consumer being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money the consumer owes due to the accrual of fees and interest by creditors or debt collectors. Not available in all states. Some third-party fees may apply. C.P.D. Reg. No. T.S. 12-03822.

ClearOne Advantage is not a credit services organization and we do not make any claims regarding improvement of a consumer’s credit scores. Entering into a debt settlement program could adversely affect your credit score.

**Disclaimer - We do not charge upfront fees and you do NOT pay our fee until a settlement has been arranged, you approve the settlement, and at least one payment is made towards the settlement. As each situation is unique, fees and costs vary. Please contact us at 888-340-4697 for a free debt analysis and for complete program details.