Debt Settlement… Simplified. How Much Debt Do I Need to Qualify?
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 Much Debt Do I Need To Enter A Debt Settlement Program?
In order for a Debt Settlement program to actually make sense for you, one thing to consider is the risk vs. reward. As we discussed in our last Debt Settlement… Simplified entry, the process will have a negative impact on your credit score. We want to make sure that you are going to see enough of a financial benefit to justify allowing your credit to take that hit.
Just like the last article, we’re going to break this down based on whether your credit is in good standing or if it is already on the lower end.
For Those With Good Credit
Having a good credit score and being current on your debts will cause the impact to your credit score to be significant. To put it simply, the higher the score, the further it has to fall. A good credit score means lower interest rates when you purchase a home or vehicle.
When maintaining a good credit score is a factor to consider, we suggest only really considering the debt settlement program if you have over $15,000 of total credit card debt. Anything below that amount, and you may not get enough of a financial benefit to outweigh the negative impact on your credit score.
On a debt settlement program, the more debt you have, the more money you stand to save. You’ll need to make sure you are saving enough to justify the hit to your credit. Your FaithWorks Advisor can help you make that determination.
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When Credit Has Already Dropped
Since your credit has already been impacted, there is less of a need to consider your credit score when looking at the financial benefit debt settlement. Your credit score is already lower, so the most important thing to do is to get rid of the debt. Fix the primary problem and, over time with work, the rest will follow.
In this case, we suggest a minimum of $5,000 of credit card debt to justify entering into a Debt Settlement Program. Again, the more debt there is the greater amount you stand to save, but if your credit score is not a concern you will see a financial benefit so long as there is $5,000 of total debt or more.
