Credit Repair, Debt Settlement and Tax Time

Credit Repair and Tax TimeAs many debt collectors and consumers already know tax time is a great time for credit repair. Creditors know that tax time typically brings many consumers a large influx of cash that many wouldn't normally have on hand and as a result offering much lower settlement offers than usual. Creditors usually aim to settle accounts for about 50-70% but lower their settlement offers to 25-50% around tax time.Credit Repair and Debt Settlement 101

When It comes to taking advantage of this great time of year to settle debts one must consider several things when negotiating settlements and working on credit repair.

Keep in mind that credit repair and debt settlement are different in regards to the fact that the focus in debt settlement  is on saving you money in settling debts while credit repair is more concerned with your credit reports and credit scores.  While the two services can work hand in hand most don't consider the benefits of both when settling debts.

Lets say your goal of settling debts is to clear up your credit so you can buy a home in the months to come, well if you aren't mindful of how an account my report after a debt is settled you may do more damage than good to your credit reports and scores.

Credit Repair and Debt Settlement 201

Below are several tips to keep in mind when negotiating settlements depending on your end goal. Keep in mind its vital to determine why you are going to be settling these debts. If your goal is to avoid getting sued or your wages garnished your game plan is going to be different from one who may be looking to get a mortgage, new car or refinance a current loan on the next several months.

1. Not matter what the goal, if your settlement agreement isn't in writing it's not real. You would be amazed at how many consumers settle debts with creditors that haven't been finalized in writing. The consequences can be huge! The creditor can legally come after you for the remainder of the balance and not only that, since you have just made a payment you have just reset the Statute of Limitations for the credit or to collect and report the debt.

2. Determine your end goal. If your end goal is saving a bunch of money when settling the debt, than it doesn't necessarily matter how the creditor reports the account to the credit bureaus once its paid. If you goal is credit repair than you would want to negotiate that the creditor deletes the account from your credit reports as part of the settlement.

3. Have a game plan. When it comes to settling debts and credit repair most people fail because they simply have no game plan. Before you call a creditor you should know what you're going to offer as a settlement and why. Tools such as a budget sheet, call log and offer in compromise letter's are a must.

Conclusion on credit repair, debt settlement and tax time.

Tax time is the time of year to work on credit repair and debt settlement. Before you pick up a phone do your self a favor and do some research. There are endless resources and companies that offer honest ethical credit repair and debt settlement services.  The key is to take advantage of this all important time of year when you have extra money mixed with the fact that creditors are willing to negotiate.