How Does Debt Settlement Work? Miami Accounting Professionals Explain

Debt settlement – Debt allows Americans to buy homes, cars, pay for college, and to enjoy things in the present that you can pay for later. But did you know that by the third quarter of just last year, consumer debt in the U.S. amounted to almost $14 trillion. According to the New York Federal Reserve, it as the 17^th consecutive quarter to increase. The $13.51 trillion debt was up $219 billion from the previous quarter.

The Miami accounting professionals learned there are four main areas of debt that keep growing, including home, auto, student loans and credit cards. For example, the total mortgage debt in the U.S. increased by $397 billion when compared t o 2017. The total auto debt increased to $1.65 trillion, student loans up $64 billion when compared to 2017, and credit cards loans reached $829 billion in 2018.

Millions of Americans are in debt, struggling to pay back their loans.

Debt settlement is one way to make paying back loans manageable. The Miami accounting professionals know it’s a complicated process, with many practitioners such as attorneys and creditors, as well as various methodologies. So how does debt settlement work? The goal is to work out a payment plan that works both for you, your budget and who you owe money to.

What are the common debt settlement arrangements?

You can settle a debt for less than the original full amount owed. To make paying back the loan more manageable, you can get the monthly payments reduced. You can have the interest waived or a reduction in the principal balance owned. The Miami accounting professionals know that some people feel comfortable negotiating the terms of their debt settlement on their own, but many don’t really understand the credit process and can end up with a bad deal.

Can a debt settlement agency negotiate on your behalf?

Yes, but you need to make sure it’s a reputable firm. Many have very limited experience, and are just playing middle man. They charge high fees, collected before the debt settlement plan is actually in place. Remember, they can’t guarantee the settlement. You may end up just paying extra fees on top of what you owe with no resolution.

A better choice may be to work with attorneys that understand credit laws where you live. Creditors, or who you owe you debt to, may be more cooperative when working with attorneys. These law professionals can also make legal threats and offer legal remedies, which debt settlement agencies may not have the legal expertise to do so. Attorneys in this field of the law also have contacts and have built relationships through the years, so they know who to ask for assistance and how to properly set up your payment agreement or perhaps even renegotiate the terms later on.

American credit card debt statistics.

As mentioned before, the third quarter of 2018 reached $829 billion in credit card debt, which was an increase of $45 billion from 2017 amounting to 26.2% of the total American debt. When the Bankruptcy Protection Act of 2005 passed, it made filing for bankruptcy much harder, so many people turned to credit cards to pay bills. The credit card made its way into Americans’ wallets in the late 50s, giving people greater purchasing power. Today, over 189 million Americans have credit cards. In fact, on average, every card holder has three credit cards, with each household carrying about $8,284 in credit card debt. The average credit card debt of a Floridian is of $8,444, which is the 12^th highest nationally.