Debt Settlement Not Cure For All Kinds of Debt
By: Methew John, Current Not yet Rated

Debt settlement can be effective for many types of debts but not all types. Below are some guidelines for assessing debt eligibility.

Several types of debts are simply not suitable for settlement. Government-related debts such as traffic tickets, fines, child support, student loans, IRS debt (taxes), and alimony cannot be settled. There are professionals that can help with some of these cases but they usually involve lawyers who specialize in those cases.



Some creditors just aren't willing to settle. Payday loans are the most common of this type. These creditors will not reduce the amount owed by one cent. Another debt of this type is a judgmental that is already being successfully garnished. Once a debt is found to be completely unsettle able it should be removed from the service.

Other debts cannot be settled because they are secured by some collateral. Mortgages, secured loans, and car loans are examples of secured debts which cannot be settled. If the security is taken away or surrendered such as in repossession or other form of revocation then the remaining balance is known as a deficiency balance and that, now unsecured, debt is able to be settled.

For some debts it is the status of the debt and not the type of debt that determines eligibility for a debt settlement service. Newly opened credit cards (opened in past 6 months) or cards with recent large purchases or balance transfers should, in general, not be placed into this type of program. This is the case as a creditor could easily claim that fraud is being perpetrated and rapid legal action would likely follow.



The most important criteria for enrolling a debt into a debt settlement program has nothing to do with the debts themselves but rather with the client. A good client must have real hardship before he/she enrolls any debts into such a service. Debt settlement is an alternative to bankruptcy. Even the most eligible debt enrolled by an ineligible client could easily cause problems for the client.

Before enrolling in a debt program it is important to do an assessment of your debts as well as your financial situation. Be aware of which of your debts are secured, which are government-related, and which have some likelihood of being settled. Most importantly one should insure their hardship is sufficient enough to realize the real benefits of a debt settlement program.

Debt Settlement Not Cure For All Kinds Not all debts are suitable for enrollment in a debt settlement program. Before considering enrolling in such a program it is critical to be aware of this information.

Several types of debts are simply not suitable for settlement. Government-related debts such as traffic tickets, fines, child support, student loans, IRS debt (taxes), and alimony cannot be settled. Other programs and professionals do often exist for these types of debt.

There are a few types of debts where creditors simply do not settle at all. Payday loans are the most common of this type. These creditors will not reduce the amount owed by one cent. Another debt of this type is a judgmental that is already being successfully garnished. Once a debt is found to be completely unsettle able it should be removed from the service.

Secured debts are also not eligible for settlement. Mortgages, secured loans, and car loans are examples of secured debts which cannot be settled. If the collateral is surrendered or repossesses then the balance remaining is now unsecured and often settle able.

Debt status is sometimes more important than the debt type. If a card has been opened very recently (6 months or less) or if recent large purchases or balance transfers have been made then this debt should not be included into a debt settlement program in most cases. In these cases creditors often determine the enrollment as fraud and can file a lawsuit agains the client.

The most important criteria for enrolling a debt into a debt settlement program has nothing to do with the debts themselves but rather with the client. Substantial hardship is the necessary criteria for enrolling in such a program. Debt settlement is an alternative to bankruptcy. If a client is ineligible then the eligibility of his debts will not matter, and this could lead to problems.

One should assess ones debts and financial situation fully before entering into any debt relief program. One should assess the types of each of their debts and the likelihood that they can be settled. Most importantly one should insure their hardship is sufficient enough to realize the real benefits of a debt settlement program.

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