Are you a Washington resident struggling with seemingly insurmountable debt? You aren’t the only one; debt has become a real issue across The Evergreen State. However, there is good news on the horizon. It might be possible to settle your debts for less than you owe, and avoid bankruptcy on top of that.
Debt settlement is the only debt option that reduces your overall debt, versus just your interest rate. That means, by enlisting the services of a debt settlement firm, you could wind up paying thousands less than you owe. But you should check with an experienced debt advisor before going down this road, because there are credit and tax implications to consider. Are you ready to discuss your options with a debt settlement specialist in Washington?
Choosing a Debt Settlement Company in WA State
According to the FTC, Washington debt settlement companies must provide you with the following information prior to registering:
- Compensation: the charges you’ll be paying must be carefully spelled out.
- Duration: they must tell you when they are going to get in touch with your creditors, and how much money must be saved beforehand.
- Risks: they must explain the unfavorable consequences that come as a result of not paying your creditors
Make sure your Washington debt negotiator is legitimate. Find out how long they have been in business, how cases they’ve managed, what their rate of success is, how much they cost, and make sure they’re licensed to do business in Washington. Note: No Washington debt settlement company should charge advance fees!
Minimum Requirements for Debt Settlement in WA
If you are carrying $10,000 in debt, can no longer pay your bills, and would rather be free from debt than have a good credit record, debt settlement might be a workable alternative to declaring yourself bankrupt. There are 6,724,540 folks who live in Washington, and it’s believed that 666,133 are burdened by credit card debts in excess of $10,000. People who have debt to income ratios of 50% or more are excellent prospects for debt relief, whether it be settlement or consolidation.
Simply put, if you’re investing more than 50% of your wages to credit cards, rent, and/or auto or college loans, you must talk with a debt settlement expert in WA. Considering that the average income in Washington is $3,752 every month, we’re talking about $1,876. You really want to aim for a ratio that’s closer to 36% ($1,351 in WA).
Downsides of Debt Negotiations in WA
Pumped up about debt settlement? Hold on. There are some things you have to know first: the disadvantages, and there are a few.
- Hurts your credit scores.
- Debt never completely cleared.
- Creditors may not approve negotiation.
- Debt builds during negotiations.
- Collections calls might not get better.
- Tax disadvantages.
- Can be 180 days before settlement occurs
These do not mean debt negotiation is not a viable option, just that it’s best to speak with an expert before proceeding.
WA Debt Negotiation vs Consolidation
Debt settlement and debt negotiations are the same thing. However, debt settlement is often wrongly identified as credit counseling, debt management, or debt consolidation. In reality, these are completely distinct solutions. Yes, they are all strategies for debt relief; however, settlement distinguishes itself by bringing about a genuine reduction in the amount owed.
That said, other methods of relieving debt – consolidation, management, and counseling – are much better for your credit rating in the long run. On the other hand, they are protracted solutions that require repaying everything you owe. While debt management programs have ongoing fees each month of $25 to 40, debt settlement fees are normally assessed when each creditor is repaid. Nearly all settlement firms will charge you around 15 percent of the balance due – that’s significant! This fee is normally paid over a period of 12-24 months.