When a person sits down and adds up their credit card debt and the totals bring them to tears its time to ask for help. If you can no longer make your minimum debt payments and your accounts are being threatened or have been turned over to a collection agency visit PayMyDebt.Org. The professional credit counselors of DEBTMA™ can negotiate with your creditors on your behalf towards a less than full payment on your debt that will settle the account for a zero balance. In many cases a consumer can settle their debt for half of what they actually owe. This debt relief option is known as debt settlement, also known as debt negotiation.
DEBTMA™ counselors will be honest and upfront about the pros and cons associated with the debt settlement process. They will only suggest this option if debt consolidation is not applicable. There is no guarantee that a creditor will agree to a partial settlement. The debt settlement process can take months to years depending on the creditors and debt amount. During the negotiation process over the limit fees, penalties and interest charges will accumulate towards the debt balance. Credit collection calls and letters can still occur. Prior to the negotiation process the consumer is informed of a savings amount that should be put into a “settlement fund” that will later be used to pay the settlement once the agreement is made. Once paid the account is closed with a zero balance being marked as “paid by settlement” or similar statement. This information will be available on the credit report and can not be removed by any person as long as it is timely and accurate. Tampering with a credit report is illegal.
If you are successful in reducing your balance due and have paid only a portion of the full debt owed you will be responsible for reporting this forgiven amount on your federal income tax return (1099A or 1099C). This forgiven (unpaid portion) debt amount is considered as a DOI or Discharge of Indebtedness Income. This same taxation is involved in vehicle repossession and home foreclosure. This information is vital and should be discussed with your credit counselor prior to making your debt relief option decision towards a debt settlement.
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