Debt Settlement Attorneys in Ridley Park, Pennsylvania

Inflation has eaten into almost everyone’s budget, and many people are turning to credit cards and personal loans to stay afloat. Many are feeling overwhelmed by the debt load they’ve taken on. 

Is there a way out of a burdensome mountain of debt? Creditors and even bill collectors will often agree to reduce your total obligation if you negotiate a debt settlement with them. However, the average person might not know exactly how to do this—or in attempting to reach an agreement, they may shortchange themselves. 

If your debt is overwhelming you in or around Ridley Park, Pennsylvania, contact us at Adams Kearney Law. We will work with you—and your creditors—to come up with a debt settlement plan that will put your finances back into workable shape and keep the creditors and bill collectors off your back.  

Adams Kearney Law and its legal team proudly serve clients not only in Ridley Park but also throughout Delaware County, Chester County, as well as surrounding cities and the greater Philadelphia area. 

What Is Debt Settlement?

Debt settlement, also sometimes referred to as debt negotiation or debt relief, is the process of working with creditors to reduce what you owe in return for a promise to pay that amount off in an established framework. When a credit card company, for instance, agrees to a lesser amount owed, it will report your account as being “paid-settled,” and of course, you will no longer have access to the credit card. What you will have is a lower amount due and the peace of mind that comes with knowing you have a more secure financial future going forward. 

While it’s possible to negotiate a settlement arrangement on your own, it can be challenging. You can even shortchange yourself by not knowing how to press for the best deal possible. Our team at Adams Kearney Law has dealt with creditors and bill collectors throughout our years of service. We know how to negotiate for the best possible deal.

Two Types of Debt: Secured and Unsecured

The debts you need to renegotiate will often have to be handled in different ways. There are two types of debt: secured and unsecured. Secured debt means that the lender has something that it can take back if you fail to pay your loan. The two biggest examples are homes and cars.  

Unsecured debt is debt involving credit cards and more. The credit card company will have no way to repossess or take back anything from you if you don’t pay. Since they have no recourse to anything you own, unsecured creditors generally charge higher interest rates and are usually more willing to negotiate if a consumer gets into financial hot water. 

Secured lenders generally will accept applicants with lower credit scores than unsecured lenders will. A score of 620 is considered adequate for a conventional mortgage. A score of 500 will get you a mortgage backed by the Federal Housing Administration (FHA). On unsecured loans or credit cards, the higher your score, the better (lower) your interest rate. 

A secured lender, however, has more options over you and your finances. A mortgage holder can foreclose and take back your home if you fall too far behind. The same holds true for an auto loan holder. For secured loans, you will have to either refinance or work toward a modification if you fall behind in your payments, or come up with the payoff amount. 

Effect on Your Credit Score 

Ultimately, the effect on your credit score when you finish the payment plan you’ve worked out during debt settlement is that your score should improve. In the meantime, however, your score may even drop, especially if you’ve gone into default on any loan or credit card you have. Generally, when you fall 180 days behind on any debt, it will be reported to the credit agencies as in default. This will have a hit on your score even before you negotiate for a settlement.  

These defaults remain on your credit report for seven years—but even so, that is better than filing for bankruptcy, which can stay on your report for up to 10 years. Your payment history accounts for 35 percent of your credit score. With defaults on your record, your score may have already dropped 100 or more points.  

It’s vital to reach out to a skilled attorney, no matter what stage you are in the debt settlement process.  

When Is Debt Consolidation a Good Option?

Debt consolidation should be considered when your finances are such that you can barely make your minimum monthly payments. If your phone is ringing off the hook with collection requests, or your email account is stacking up with overdue notices, it’s time to consider debt settlement.