How to Settle Your Debts in Arizona

Collect Details About Your Debts 

Now it’s time to gather all the important information about your individual secured and unsecured debts. Recent account statements with each debt’s current outstanding balance, interest rate, and monthly payment amount should provide the information that you need. Do this for every one of your debts, even those you don’t want to settle. Even student loans.

Get a current credit report from the main credit bureaus and review every debt. It will help you decide which of your debts are best for settlement. Organizing a list of each debt with its relevant details will allow a credit counseling agency or debt settlement company to get a clearer picture of your current financial situation. The more information a debt relief agency has about your debts, the better it can evaluate your needs and find solutions. It will also help make you more informed and in a better position to move forward and consider other options like debt consolidation and debt management.  

Collect Details About Your Ability to Settle Your Debts 

What resources do you have available to participate in any kind of debt settlement program? For a debt settlement to work, you either must have the ability to accumulate income or sell valuable property quickly. 

Do you work, or do you pay your living expenses from non-employment income? If you work, are you self-employed? Just as expenses may be fixed or variable, income can be as well. If you always work forty hours a week, no more, no less, and earn a fixed hourly wage, it’s easy to determine income for creating a budget. If you’re self-employed and some weeks are better than others, then it’s more difficult to determine income that’s representative of a typical work week.

After you have a clear picture of what your income is every month, consider your expenses, which you can separate by those that are fixed and those that are variable. Fixed expenses don’t change much, if at all, from month-to-month. Student loan payments, cable, internet, car insurance are some examples. Variable expenses change monthly based on use, need, and other reasons. Groceries, gas, and recreation costs are types of variable expenses. A good way to estimate all your expenses is to review your bank statements for the last 3 months  and then dividing the total for each category by 3 (or however many months of statements you reviewed) 

Whatever amount of money remains after subtracting expenses from income is the amount of disposable income available to pay creditors. With all this information at hand, you can consider and decide whether a debt settlement will work for you and help you accomplish your financial goals. If you don’t have enough disposable income to make a debt settlement work, you may have to consider other options, like debt management or debt consolidation, but don’t give up, even if you have a low credit score.

Learn About the Costs to Settle Your Debts in Arizona 

When determining the costs involved in settling your debts, you have to consider that there are costs that you incur whether you hire a debt settlement company or not. Remember, you’re still incurring late fees and penalties during the time that you are not actively seeking a debt settlement. Under federal law, a debt settlement company can’t collect fees from consumers until it has settled or resolved your debts. It can’t make false or unsubstantiated claims about its services. Some companies base their fee on a percentage of total debt while others charge based on the savings provided by their debt settlement program. A debt settlement company can charge only a portion of its full fee for each debt it settles.

Decide Whether to Work with an Arizona Debt Settlement Company 

There’s no rule that says that you have to hire a debt settlement company. It’s not like a debt consolidation where you need a new loan to make it work. While an Arizona debt settlement company can negotiate a debt settlement on your behalf, you can also do it alone, which will save any fees incurred by hiring a debt settlement company to do it for you. While you’re the person in control of every part of your debt settlement, you’re alone and without assistance in your quest. It can take a lot of time, energy, and patience. A risk is that you will have no ‘insider information’ about creditors and what they are likely to accept. You also won’t have anyone with experience in debt settlement matters to ask advice from or discuss strategy with before making any offer.

Research Arizona Debt Settlement Companies 

Debt settlement companies must disclose key, fundamental aspects of their services, including the approximate length of time it will take to get results, the cost, the negative consequences of using a debt relief service, and other important information about dedicated accounts if used. Some of these potentially negative effects include a drop in your credit report and credit score, the possibility of legal action; uninterrupted collection actions; and that you may incur additional fees and interest. These negative actions usually occur around the time you are asked to stop making payments to your creditors or by a program that requires you to stop making payments.

A debt relief company also must tell you that the funds, and any interest that accumulates in your debt settlement program escrow account, are yours. It must also inform you that you may withdraw these funds at any time without penalty. Any debt settlement company that tells you to stop communicating with creditors before doing anything for you is not a reputable business enterprise. If it charges fees before performing any service, it’s breaking the law. Consult with the Better Business Bureau or other consumer protection organizations to find out about trustworthy, qualified debt settlement companies. 

There are currently no specific laws governing the practice of debt settlement in the state of Arizona. All debt falls under the federal Fair Debt Collection Practices Act (FDCPA). Consult the Arizona Attorney General’s website for any changes affecting debt collection law.

How to Make Your Debt Settlement Work 

You’ve worked hard during the debt settlement process, gathering the details of your personal finance history to reduce your full amount of debt. Make sure that the due date for the monthly payment falls on a logical time - a payment due the same time of the month as your mortgage or rent may not be workable. Set up a budget that sets aside funds for an expected large one time expense, such as your annual automobile registration. Any influx of funds should be used to make extra payments and replenish your emergency fund if possible.

Alternatives to Debt Settlement 

There are alternatives if you encounter difficulty forming an effective debt settlement plan. Different people typically have different options based on their circumstances, which may have to do with their amount of debt, types of debt, and ability to receive settlement offers. Debt settlement is no different.

An Arizona debt settlement may not be for everyone, but that doesn’t mean there’s no way to escape your financial predicament. There remain effective solutions to alleviating problems repaying debts. Using credit counseling as a resource can help you learn about the pros and cons of options such as debt management and debt consolidation.