Unfortunately, divorce and credit card debt often go hand in hand. An
overwhelming number of women find themselves in a bad position after their
marriage ends. Not only are they trying to make it on one income, but many are
also faced with a substantial amount of debt that they have no conceivable way
of paying off. Some have the option of getting a consolidation loan, but many
women either don’t own their own home, or don’t have enough equity to qualify
for a consolidation loan.
Should I declare bankruptcy?
At this point, many women view filing for bankruptcy as the only solution. Even though this an option, bankruptcy should be the absolute last resort because it can wreck your credit rating. Bankruptcy information can stay on your credit report for 10 years, hindering your ability to get future credit, a job, reasonable insurance rates, or even a place to live.
What are my other options?
If you are behind on your payments and see no way possible of paying off your unsecured bills, then debt settlement might be an alternative for you. Most people who qualify for this have more than $10,000 in unsecured loans, such as credit card balances, medical bills, signature loans, and debts for services.
To help you pay off your balances, a settlement firm will negotiate with your credit card companies to reduce the total balance that you owe. Creditors are often willing to settle for less than the full amount owed if they feel that a person is likely to have their loan obligations cancelled through bankruptcy proceedings. Once an agreement is reached with your creditors, you will make payments until the reduced balance is paid off.
If you have gone through a divorce and credit card debt is getting the best of you, the following information can help you decide if this might be an option for you.
When is settlement an option?
How long will it take?
In most instances, the settlement process can be completed in two to four years.
How much will my loan be reduced by?
Most credit card accounts settle on 30% to 50% of the amount owed, but this amount can vary due to the settlement policies of each individual creditor.
How does the process work?
First, the settlement company will examine your financial situation to see if you would be a good candidate for their program. If you do qualify, then a plan is drawn up that includes how long the process will take and how much money you will need to pay to make the plan work.
How much will it cost?
Some firms charge a percentage of the total outstanding balances. Other companies calculate their fee based on what they will save the customer.
Will debt settlement hurt my credit?
If you have been having problems making your payments for an extended period of time, it is already reflected on their credit report. Once a settlement has been reached with a creditor, your account will reflect that it has been settled, and show a zero balance. When your obligations are paid off, you credit score will slowly improve, which this usually takes about 12 to 18 months. Either way, it reflects much better on your credit report than filing bankruptcy.
Do I have to claim this on my taxes?
It’s important to remember that any amount forgiven through settlement is considered taxable income. This means that you will need to report it to the IRS come tax-time.
What else do I need to consider?
If you are thinking about using a negotiation firm to help settle your unsecured debts, do some homework first. You should:
How do I find a reputable company?
You can find companies that will help negotiate with your creditors either in the phone book or online. One company that has a solid reputation is Debt Shield, not only for women facing divorce and credit card debt, but also people devastated by job loss and other disasters. They are the only company that offers a customer service guarantee of service within your projected time frame.
Should I declare bankruptcy?
At this point, many women view filing for bankruptcy as the only solution. Even though this an option, bankruptcy should be the absolute last resort because it can wreck your credit rating. Bankruptcy information can stay on your credit report for 10 years, hindering your ability to get future credit, a job, reasonable insurance rates, or even a place to live.
What are my other options?
If you are behind on your payments and see no way possible of paying off your unsecured bills, then debt settlement might be an alternative for you. Most people who qualify for this have more than $10,000 in unsecured loans, such as credit card balances, medical bills, signature loans, and debts for services.
To help you pay off your balances, a settlement firm will negotiate with your credit card companies to reduce the total balance that you owe. Creditors are often willing to settle for less than the full amount owed if they feel that a person is likely to have their loan obligations cancelled through bankruptcy proceedings. Once an agreement is reached with your creditors, you will make payments until the reduced balance is paid off.
If you have gone through a divorce and credit card debt is getting the best of you, the following information can help you decide if this might be an option for you.
When is settlement an option?
- When you haven’t been able to make your payments for several months.
- When you don’t qualify for credit counseling because your unsecured loans total more than $10,000.
- If you don’t have any assets or equity in a home.
How long will it take?
In most instances, the settlement process can be completed in two to four years.
How much will my loan be reduced by?
Most credit card accounts settle on 30% to 50% of the amount owed, but this amount can vary due to the settlement policies of each individual creditor.
How does the process work?
First, the settlement company will examine your financial situation to see if you would be a good candidate for their program. If you do qualify, then a plan is drawn up that includes how long the process will take and how much money you will need to pay to make the plan work.
How much will it cost?
Some firms charge a percentage of the total outstanding balances. Other companies calculate their fee based on what they will save the customer.
Will debt settlement hurt my credit?
If you have been having problems making your payments for an extended period of time, it is already reflected on their credit report. Once a settlement has been reached with a creditor, your account will reflect that it has been settled, and show a zero balance. When your obligations are paid off, you credit score will slowly improve, which this usually takes about 12 to 18 months. Either way, it reflects much better on your credit report than filing bankruptcy.
Do I have to claim this on my taxes?
It’s important to remember that any amount forgiven through settlement is considered taxable income. This means that you will need to report it to the IRS come tax-time.
What else do I need to consider?
If you are thinking about using a negotiation firm to help settle your unsecured debts, do some homework first. You should:
- Check the company out with your state Attorney General and the Better Business Bureau before signing up for any settlement plan. They can tell you if any consumer complaints are on file about the company that you are considering doing business with.
- Make sure that the company you are considering will work with all your unsecured loans.
- Understand what fees will be charged and what services are associated with the plan.
- Get everything in writing and read over your contract carefully.
How do I find a reputable company?
You can find companies that will help negotiate with your creditors either in the phone book or online. One company that has a solid reputation is Debt Shield, not only for women facing divorce and credit card debt, but also people devastated by job loss and other disasters. They are the only company that offers a customer service guarantee of service within your projected time frame.
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