irs bankruptcy tax guide
What Debts Can be Enrolled in Debt Settlement?
Not all types of debt are best suited for a debt settlement programs. This article is a quick guide to assessing the eligibility of your debts for such a program.
Several types of debts are simply not suitable for settlement. Government-related debts such as traffic tickets, fines, child support, student loans, IRS debt (taxes), and alimony cannot be settled. Other programs and professionals do often exist for these types of debt.
Some creditors just aren’t willing to settle. Payday loans are the most common of this type. These creditors will not reduce the amount owed by one cent. Other types of debts in this category vary by creditor and by individual situation. Once a debt is found to be completely unsettle able it should be removed from the service.
Secured debts are also not eligible for settlement. Mortgages, secured loans, and car loans are examples of secured debts which cannot be settled. If the security is taken away or surrendered such as in repossession or other form of revocation then the remaining balance is known as a deficiency balance and that, now unsecured, debt is able to be settled.
Debt status is sometimes more important than the debt type. If a card has been opened very recently (6 months or less) or if recent large purchases or balance transfers have been made then this debt should not be included into a debt settlement program in most cases. In these cases creditors often determine the enrollment as fraud and can file a lawsuit agains the client.
The most important criteria for enrolling a debt into a debt settlement program has nothing to do with the debts themselves but rather with the client. A good client must have real hardship before he/she enrolls any debts into such a service. Debt settlement is an alternative to bankruptcy. If a client is ineligible then the eligibility of his debts will not matter, and this could lead to problems.
One should assess ones debts and financial situation fully before entering into any debt relief program. One should assess the types of each of their debts and the likelihood that they can be settled. The key criteria one should possess before enrolling into debt settlement is real hardship.
About the Author
The author is a Senior Debt Specialist at Crusader Consumer Services. We are one of the leading Debt Settlement Companies. We specialize in Debt Settlement Service. Please visit our website for more details.
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