Debt Settlement… Simplified. How Long Does It Take?

Josh Christian Debt Relief

Debt Settlement… Simplified

We’re breaking down the in’s and out’s of debt settlement so you can made an informed and educated decision.

How Long Does It Take?

For this question today, we will focus on how long a typical debt settlement program takes.

Settling a single account with a creditor can be very quick. If you have one single past-due account and a lump sum of money you can probably call up the creditor and have the debt settled in one phone call.

That isn’t usually what we hear from the folks who reach out to us. The people that we speak with to tend to have several accounts that are in default (or soon will be) and not much of a lump sum to work with.

Every Situation Is Unique

It sounds cliche, but when it comes to debt settlement every situation truly is unique. Your overall situation is going to largely determine how long it will take to settle your debts. Here are a few of the factors that will determine how long your debt settlement program will take.

Debt Amount
Number of Cards
Funds Available Monthly
Funds Available Now
Card Payment and Purchase History
Length of Delinquency

A Few Averages

Even though every situation is unique, there are a few averages that we can share to help you understand how long debt settlement will take.

Average Program Length

The average program (goal of settling all accounts) is structured over 3 years time. That being said, on a 3 year program, our goal is to have you completely credit card debt free within the 3 year period.

So that’s at the big-picture program level. Now, let’s look at how long it usually takes to settle one single account.

Average Time To First Settlement

In most cases, our members will see their first settlement within the first 5-6 months of their program. This is for a variety of reasons.

First, you will now have saved up enough funds for a reasonable offer to be made on an account. We tend to wait until you have at least 20% of an accounts balance saved up before reaching out to a creditor. By the 6th month of your program we would most likely already have passed that point, so we can now not only make a reasonable offer, but a strong one.

Second, the account is now about 180 days past due, which is a bit of a magic time when it comes to securing a settlement. To avoid getting too technical, 180 days past due is when a creditor will usually mark a loan as a loss and charge-off the debt, so resolving it prior to that point benefits them.

Finally, it is possible that the account may now have been placed with, or sold to, a third party collection agency. The majority of our settlements occur with these outside entities so once they start transitioning to this stage they are ready for negotiation.

A Few Exclusions

Since you probably noticed a lot of “usually” and “most often” statements above, I’d like to make mention of common exclusions so you know ahead of time if your program might finish a bit sooner or later than expected.

Single Account Memberships

Our average member has 6 credit cards enrolled in our program. That is a big factor in the average time to first settlement being 5-6 months.

When an individual enters our program with only one single account, chances are good that it is going to take quite some time to see the account settled.

Let’s say we structure a 1 account membership over a 24 month period. Even if we arrange a 12 month settlement, that means it would take 12 months before seeing an agreement put into place on that account.

For this reason we do not typically suggest our program when there is only one account to be resolved. All too often these member have a tough time waiting for progress to be made and pursue other avenues.

Unable To Make Payments

While one big benefit of the debt settlement program is that it does offer a degree of flexibility, when payments are missed progress is slowed. Because of added interest and late fees, your accounts balances continue to grow.

Missing one payment can usually just add one month on to the end of your program, but missing several will have a compound effect in the long run.

Old Accounts

Have a few accounts that have not had a payment in a long time? We might be able to settle these accounts much quicker, and at a lower cost, than an account that is only a few months past due.

If a creditor has not received payment for 4 years, they may be happy to accept a lower than average settlement. A few of these older accounts might have your program finishing well ahead of schedule.

Increased Payments and Additional Contributions

Just like is mentioned above, on the other side of the spectrum is making extra efforts to fund your settlement fund account. If you increase your payments or make occasional additional contributions your program can finish well ahead of schedule.

What’s more, if you make an additional contribution equal to 3 months contribution or more, we’ll reduce your next settlement fee by 10%. When you make the extra effort, we will too.

Ready to start your journey toward a debt free future? Fill out the form on the side of your screen to get your free no-obligation quote.