Irvine Debt Settlement Attorneys

The Debt Settlement Process

In debt settlement, your attorney will negotiate directly with your creditors or the debt collection agencies hired by your creditors. Our goal is to settle your debt for less than what you actually owe, usually for the smallest amount possible that will satisfy your creditors and allow you to make payments. To get started, we assess your current financial situation so that we can determine what needs to be done based on your circumstances.

Here’s a detailed explanation of the debt settlement process:

1. Assess Your Financial Situation: Evaluate your total debt, noting amounts, interest rates, and creditors. Analyze your budget to determine your income, essential expenses, and how much you can allocate toward debt settlement. This helps you understand your financial standing and capacity for settlement.
2. Research Debt Settlement Companies: Look for reputable debt settlement companies with good reviews, proper accreditations, and no upfront fees. Verify that the company is licensed to operate in California to ensure legitimacy. Thorough research helps you choose a reliable partner for the settlement process.
3. Initial Consultation: Most debt settlement companies offer a free initial consultation to review your debts and financial situation. During this consultation, the company will assess your eligibility for a settlement plan. This step helps you understand the potential strategies and outcomes.
4. Create a Debt Settlement Plan: The debt settlement company will develop a customized plan based on your financial situation. You may need to set up a dedicated savings account to accumulate funds for settlements. This plan outlines the steps to negotiate with creditors and settle your debts.
5. Stop Making Payments: To demonstrate financial hardship and incentivize creditors to negotiate, you may stop making payments to them. Be aware that this can negatively impact your credit score. This strategy is used to pressure creditors into considering settlement offers.
6. Negotiate with Creditors: The debt settlement company will negotiate with your creditors to offer lump-sum payments less than the total amount owed. Successful negotiations result in the creditor agreeing to accept a reduced amount to settle the debt. This phase involves reaching agreements to resolve your debts.
7. Making Payments: Once a settlement agreement is reached, you will make the lump-sum payment from your savings account. In some cases, the settlement may allow for installment payments over a short period. Making these payments finalizes the settlement with your creditor.
8. Finalize Settlements: Ensure you get the settlement agreement in writing from your creditor to avoid future disputes. The settled debt should be reported as "settled" or "paid" on your credit report. This step officially concludes the settlement process for each debt.
9. Post-Settlement Steps: Develop a budget and financial plan to avoid accumulating new debt. Focus on repairing your credit score by making timely payments and managing your finances responsibly. Post-settlement, aim to maintain financial stability and improve your credit health.

The advantages of debt settlement include:

• Clearing your debts on your schedule
• Lower interest rates
• Stop accruing interest on existing debt
• No more calls from creditors
• No filing for bankruptcy

Our experience has shown that creditors are generally amenable to settling for an amount less than you owe if you have suffered a hardship or as a way for them to avoid a bigger loss should you resort to bankruptcy.

Debt settlement is a valid legal process as it affords creditors payment they might not otherwise receive. When regarded as renegotiation of the contract terms of your debt, it is well-established under the law.

Helpful Resources

• The Consumer Financial Protection Bureau provides comprehensive information on debt collection practices, consumer rights, and options for managing debt.