Debt settlement may not be the best way consumers with less than perfect credit try to turn themselves around

Credit repair
Quite often credit-challenged applicants want to know if there are quicker or easier ways to fix bad credit.
And while everyone’s credit situation is different, we know it usually takes time to do this because here at Auto Credit Express we’ve been working with car shoppers with less than perfect credit for the last two decades. It’s also why our website contains information on issues ranging from no credit auto loans to today’s topic, debt settlement.
Questions about debt settlement
But since we’re not experts on the topic, we’ll turn to those who are.
Not that long ago the Illinois CPA Society issued a press release dealing with this very topic. Here are some questions and answers it contained:
How Does Debt Settlement Work?
Simply stated, debt settlement is an approach to debt reduction in which the debtor and the creditor agree on a reduced balance that will be regarded as payment in full. A credit company must have a solid reason to believe that you are actually unable to pay them before entering into a debt settlement agreement. Unfortunately, you prove this by not paying them which is an instant black mark on your credit score that doesn’t go away for seven years. Once you’ve proven you can’t pay them, you must negotiate a balance you can pay. The debt doesn’t go away, it just gets lowered.
What are some of the Consequences of Debt Settlement?
In addition to having already hurt your credit score by non-payment, you must pay the negotiated balance immediately. Also, any debt that is forgiven is considered income – and you will have to pay taxes on that income.
Are There Alternative Solutions?
You can call your credit card companies and ask them to reduce your rate. Point out that you’ve been a loyal customer who’s paid on time in the past. If the first person you speak to isn’t authorized to lower your rate, ask to speak to a supervisor. Be persistent and assertive.
Also try to get rid of your payments faster by trying to pay more than the minimum; even $5 makes a difference.
How do you get on top of already large minimum payments?
Cut out extras to make it work and pay your credit balances down first – no more premium cable, expensive data packages on your phone or eating out too many lunches or dinners. What you save goes to paying your credit card. Also consider selling through consignment shops or eBay things you bought but aren’t using. Look at your budget and lifestyle carefully to see where you’re living outside of your means and identify where you can cut back.
The Bottom Line
As the Illinois CPA society puts it, “Debt settlement is a serious decision with serious repercussions. It’s important to think beyond your current situation. With debt settlement you’ll have a black mark on your credit report that could keep you from any number of new things you’d like in the future – a house, apartment, job or car.”
Also keep in mind that if you have auto credit issues and you’ve been turned down by a traditional lender, you have more choices than just a tote the note dealer.
That’s because here at Auto Credit Express we work with dealers that understand a broad range of credit issues and, even with poor credit, can offer you your best chance for approved auto loans.
So if you’re ready to establish your car credit, you can begin now by filling out our online car loan application.