Considering Credit Repair with Debt Settlement

 

 

According to the Illinois CPA Society one alternative to no credit auto loans may not be the best way for credit challenged consumers to turn their financial situations around

Credit repair alternatives

We are often asked by car loan applicants with less than perfect credit if there is an easier way to fix bad credit.

Here at Auto Credit Express we know that everyone’s credit situation is different but we also realize it takes time to do this. That’s because, for the past two decades, we’ve been helping car buyers with credit issues find dealers for their best opportunity for auto loan approvals.

But since we’re not experts on another way to approach the credit repair process, debt settlement, we’ll refer to those who are.

Questions regarding debt settlement

Earlier this year, the Illinois CPA Society issued a press release dealing with debt settlement. Here are some questions that it answered:

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.

As we see it

The Illinois CPA society puts it this way: “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.”

One more thing to keep in mind: if your car credit is less than perfect, Auto Credit Express can help you find a dealer for your best chance at an auto loan approval.

If you’re ready to start rebuilding your auto credit, you can begin now by filling out our online car loans application.