Debt Resolution

Debt resolution summary: 

• Debt resolution allows you to pay less than what you owe and have the rest of the debt forgiven.

• Creditors might agree to resolve debts if they don't believe they can collect the full amount owed. 

• You can negotiate to resolve debts yourself or get help from a professional debt resolution company. 

Debt resolution definition and meaning

Debt resolution is a legitimate way to get rid of debt without paying in full. When you resolve debt, your creditor agrees to accept a percentage of the amount owed. The rest of the debt is forgiven and you don't have to pay it. 

You can negotiate to resolve your own debts, or you can get help from a debt resolution company. 

Key concept: Debt resolution is a legal way to reduce the amount of debt you owe. 

More about debt resolution

Debt resolution is a way you could significantly reduce the amount of debt you have to repay to your creditors. It's 100% legal to resolve debts. Your creditors just have to agree to accept less than what you owe. The rest is written off, which saves you money and helps you get on the path to a better financial future. 

If you have a financial hardship and are overwhelmed by what you owe, debt resolution could be a lifeline. 

Comprehensive breakdown of debt resolution

Anyone can try to resolve their own debts. But it can be a tiring, intimidating process. Creditors want their money. They’re likely to play hardball and push you to pay your full debt, or close to it. To get partial debt forgiveness, you’ll probably have to engage in several rounds of communication and assertively advocate for yourself. All at a time when you’re probably feeling at least some of the negative emotions that go along with severe financial distress.

If you don't feel comfortable doing your own debt negotiations, you could ask a debt resolution company for help. Here's how the process works if you go the expert route.

1. You tell the debt resolution company about your financial situation and get a free debt analysis. If you're a candidate, you let them know which debts you want to enroll in your plan. 

2. The debt resolution company opens a dedicated account for you that you control. This is an account at a partner bank that you own and control. It’s just for building up funds to offer your creditors.

3. You make affordable monthly deposits, typically by electronic transfer from your everyday checking account.

4. The debt resolution company negotiates with your creditors to reduce what you owe.

5. Once an agreement is reached and you approve it, the debt resolution company uses money in your dedicated account to pay your creditors.

6. The rest of the debt balance is forgiven. 

The process is rinse and repeat until all your enrolled debts are resolved. 

Professional debt resolution relieves the stress of dealing with your creditors directly. A good debt resolution company should already have relationships with all or most of your creditors and might be able to get better results than you could get for yourself. 

Debt resolution companies charge fees. A reputable company won't charge you until an agreement is reached, you approve it, and at least one payment is made toward it. 

How long does it take to pay off debt? Most people who enroll in a debt resolution program resolve their first debt within a few months. Overall, it typically takes two to four years to negotiate all of your enrolled debts.

Key aspects of debt resolution

Debt resolution is distinct from other types of debt relief, like debt consolidation or debt management plans. Here are a few helpful tips to know. 

• A debt resolution company can help you resolve unsecured debts, like credit cards, installment loans, personal loans, medical bills, or certain payday loans.

• You might need a minimum amount of debt to get help from a debt resolution company. (Achieve, for example, enrolls members with $7,500+ in unsecured debt.)

• You don’t need good credit for debt resolution. You just need the right type and amount of debt to qualify. 

• Debt resolution is for people who have a financial hardship and can’t afford to fully repay their debts.  

• Forgiven debt may be taxable for some people. 

• Debt resolution won't stop a creditor lawsuit. Only bankruptcy can do that. 

Debt resolution isn't right for everyone, but it may be worth exploring if you need help with credit cards or other debts. Schedule a free debt evaluation to find out if you’re a candidate.