Six Degrees of Debt Relief

SettleiTsoft is a smart debt relief alternative for debt settlement

Financial hardships caused by the difficult economy have caused millions of consumers to accumulate billions of dollars in credit card debt which they no longer can repay.  If you’re one of these people seeking debt relief and find yourself asking “What do I do now?” you’ll be glad to know that you do have choices – six of them in fact – from making minimum payments to debt negotiation and debt settlement.  A brief review of these options should allow you to address your personal debt crisis in a manner that is most suitable to your particular situation.


…when and if you can.  You probably already know this approach is doomed to fail.  While the credit card company will enjoy getting some money out of you every month or so, the annual interest rate will undoubtedly be well over 20% and it could take decades to pay off the balance.  For example, say you have $30,000 in credit card debt.  At an average interest rate of 20%, assuming you make an initial minimum payment of 5% of your current balance, it will take 13 years and cost you nearly $45,000 to pay off the original $30,000 debt.

However, let’s say you want to pay off the $30,000 balance in 36 months.  Again assuming you make an initial minimum payment of 5% of your current balance, your approximate monthly payment would be $1,115, adding another $10,137 in interest for a total payout of $40,137. If neither of these scenarios is feasible, then other alternatives must be examined.


…but chances are you have already discovered that managing your debt without some level of professional assistance can be treacherous.  One common problem:  most of us tend to be optimistic when it comes to future income.  This is why so many people often use one credit card to pay another credit card.  The usual result is even more credit card debt that cannot be repaid.  Therefore, if you choose to settle your debt on your own, you have to learn how to do it.  There are plenty of books and online resources available, but this takes a great deal of time and effort.  Since being persistent and persuasive when it comes to dealing with creditors is essential, the gift of gab would be extremely useful.

In any case, make certain to establish a repayment plan with each Creditor that is practical, affordable, and can be adhered to.  Be aware:  If you miss or skip any payments, the entire repayment plan could be cancelled and you’ll be right back where you started.  Although debt settlement may be accomplished in this manner, it is often tedious and troublesome.  Fortunately, there is free software available on the Web which allows you to interface with your creditors online 24/7.  We’ll talk more about that in a moment.


…could be suitable if your credit is still in good standing, your credit score is high enough to qualify, and the accounts are still with the original creditor.  The loan will be utilized to pay off all your existing credit card debt and then repaid 100% in monthly payments at the agreed new rate of interest (which is often offered at a variable interest rate; something to be avoided if at all possible).  This would be a sort of a do-it-yourself option without going through a debt consolidation company.

However, once again using $30,000 as our total debt example and anticipating a variable interest rate, your total payout over the life of this 5 to 6 year consolidation loan would exceed $48,500.  In addition, this approach also probably means saying goodbye to all of your credit cards (although you may be able to keep one for emergencies).  Keep in mind, if a payment is missed, the collection efforts will be similar to what you may have already experienced with your current creditors.


…is a good alternative for people who can afford their monthly payments, but missed one or two payments as a result of unforeseen circumstances that should not recur.  Designed to repay 100% of the credit card balances currently owed, a Credit Counseling Plan typically requires consumers to give up all their credit cards and make one monthly payment of approximately 2.5% of the outstanding balance, plus the credit counseling agency’s monthly fee (unless the fee is paid by the creditor).  In exchange, many creditors will re-age your account and stop fees after you have made 3 to 4 regularly scheduled payments.  This repayment program usually takes 60 months to complete.  When opting for Credit Counseling, a not for profit agency that charges minimal fees should be selected.



…is, in most circumstances, the least desirable.  In 2005, as a direct result of creditor lobbying efforts, bankruptcy regulations were changed, making it more difficult for consumers to qualify for a complete discharge of their debts (under Chapter 7).  To qualify, a consumer’s income must first satisfy a “Means Test”, which is based upon earning less than the average income for a family of comparable size in the area you reside.  You must be willing to turn over all of your non-exempt assets to the Trustee in exchange for the discharge and agree to participate in two approved credit counseling courses.


In 2015, despite the obstacles, 819.240 consumers filed for bankruptcy protection; with over 1/3 discovering a Chapter 13 filing was their only realistic bankruptcy option.  A Chapter 13 bankruptcy looks at your budget and after allowable expenses, has you commit all of your available income to a repayment plan that must be approved by your assigned Trustee.  The Trustee monitors the repayment plan and your income during the plan (typically 60 months).  After each and every payment is made as scheduled, the Trustee will discharge the remaining debt.  Unfortunately only about 20% of Chapter 13 bankruptcies are paid to completion.  However, no matter the end result, your bankruptcy filing will negatively impact and remain on your credit report for 10 years; during which time you will most likely be unable to obtain home or business financing.


…may be the best option.  When repaying the debt monthly in the amounts required by the creditor is just too much and bankruptcy is out of reach, too drastic or absolutely the last resort, negotiating a settlement to resolve each outstanding debt is the alternative which provides a welcome relief for many consumers.  Each month funds are set aside and accumulated so that offers to resolve the outstanding balance – often for less than the full amount owed – can be made on your behalf.  If you are like many, much of the outstanding balance you owe is interest and fees.  As such, your creditors are often willing to accept substantially less than what they are owed to resolve the debt.  Your monthly payment is your monthly commitment to resolving your debt issue and as such is designed to comfortably fit your budget, but with the flexibility to skip a payment without additional consequence in the event of an emergency or unforeseen expense.


Debt Settlement is usually a good choice for those consumers whose credit card payments are over 90 days in arrears and who are experiencing financial hardship.  Even though new debt settlement laws were enacted in late September 2010 and the debt settlement industry has undergone a great deal of change, it still remains a practical choice.  Instead of charging fees upfront for settlements, debt settlement companies have had to change their business model and adapt to the new climate.  The new laws do permit fees to be paid by the consumer, but only after the creditor has been paid.  While some of these companies and individuals claim they offer free debt settlement advice or trial offers, the question the consumer must ask is:  What is truly free?  Sadly, the vast majority of these companies and individuals use your financial predicament to feather their own nests by selling you a book, CD or other propaganda.  They do not provide actual debt negotiation services.


Fortunately, there are online tools for debt settlement that are, in fact, free. SettleiTsoft® offers an excellent Web Solution tool, which may be accessed via  This intuitive, user-friendly software platform provides powerful budget management tools and creates a virtual environment for debtors and creditors to electronically negotiate and resolve the consumer’s debt crisis.  Most importantly, the settlement process is totally in the consumer’s control and can be customized to suit an individual’s personal financial situation.

The robust software does virtually all the work, including debt negotiation with your creditors, by generating settlement proposals to the creditors, which are then monitored and updated by the consumer, as well as tracking all account activity.  Basically the consumer enters the required personal and creditor account data, uses the Budget-iT tool to determine monthly disposable income that may be put aside in the consumer’s settlement savings account, and then chooses a settlement plan accordingly.  This system is completely transparent, allowing both the debtor and creditor 24/7 access to view all pertinent activity.


Debt Negotiation, particularly by using the free debt negotiation software SettleiTsoft®, avoids bankruptcy, dramatically reduces the debt amount owed (usually by 50% to 60%), eliminates the need for additional loans at variable interest rates, eliminates fees by attorneys, debt settlement companies, loan consolidators, and credit counseling services, and allows you to decide which credit card accounts to include in your settlement plan (thereby permitting you to hold onto credit cards that are in good standing).

Remember, the worst debt relief approach is to do nothing.  So, if you are one of the millions of consumers who have unsecured debt that is beyond your control, thoroughly analyze the six available options, and then choose an action plan that you believe will work best to help restore your financial peace of mind.

Please Note:  This information is for educational purposes only.  For specific advice, please contact a licensed professional.

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