You may be struggling with debt and wonder whether a debt settlement calculator can inform you about the cost and pros and cons and settlement options of debt settlement. A calculator can definitely do that and more.
Below is the debt settlement calculator that provides your payment plan estimate and compares that option against other debt relief options such as debt management, payoff planning, Chapter 7 and Chapter 13. We also include pros and cons to make sure you are informed.
A debt settlement calculator should help you estimate the all-in cost and duration of debt settlement. It should also outline how the fees work. Thus, the results should help you compare the cost and duration of debt settlement's monthly payment to your current monthly obligations. The debt settlement calculator below also helps you compare debt relief to other options such as debt management, payoff planning, Chapter 7 and Chapter 13 bankruptcy.
Let’s now cover the inputs into the debt relief calculator to show you how we come up with the calculations.
The debt settlement calculator first estimates that the debt settlement firm will negotiate to a 50% settlement on the enrolled debt. Next, the debt relief calculator generally estimates a fee between 15-20% of enrolled debt. Many debt relief companies charge up to 25-27% of enrolled debt, but if your case isn’t extremely challenging, those fees can be quite high.
Next, we would use the fee and the estimated settlement percentage to help you understand your duration. Many debt settlement companies will all you to have plans between 36 and 60 months.
Here’s an example of a debt relief calculator result.
The debt relief calculator has a variety of assumptions to consider. First, the calculator assumes a settlement percentage of 50% average across the board. This is a blended 50% average, so some accounts you may settle for 40% and some accounts, you may settle for 60%.
Next the calculator assumes that all creditors will negotiate a settlement. Finally, the assumptions are that fees are interest would be included in the settlement percentage.
The debt settlement calculator also shows the pros and cons of the debt settlement option, but it can also include debt management, debt payoff planning, Chapter 7 and Chapter 13 bankruptcy.
Next, the debt relief calculator also shows specific options that Ascend has vetted that you can utilize for debt settlement, bankruptcy, debt management and debt payoff planning. Each of these options provide free evaluations to go through that option, so you can compare and contrast to make the most informed decision.
The debt settlement calculator also provides an avenue where you can ask questions. For example, you can add your question and get responded to by email, phone or text. Debt settlement is complicated, so the calculator has a space for you to ask questions.
The debt relief calculator provides a deeper dive of the pros and cons, so let’s go through those now.
While debt settlement can be a great option for many people, let's chat about the pros and cons of debt settlement.
There are negative implications of debt settlement, but there are also many positive attributes for those who are struggling with debt and cannot continue to make ends meet. Let's go through the pros.
With all debt relief options, there are a host of cons as well to consider when choosing whether debt settlement is right for you. Let's go through the cons.
The debt settlement calculator also covers alternatives such as Chapter 7 bankruptcy, Chapter 13 bankruptcy, debt management and debt payoff planning.
There are a number of alternatives to debt settlement. Each has it's own pros and cons, so understanding these pros and cons should help you make the right decision.
Debt Management is a common alternative to debt settlement. In debt management, the non profit company negotiates interest rates instead of debt amounts. Thus, you may save less money with debt management, but your credit score may stay more intact.
Debt Payoff Planning is where you prioritize which debt you pay off fastest by paying more than the minimum balance. In this option, you have to have more than the minimum balance to prioritize specific balances to get you out of debt faster.
Chapter 7 Bankruptcy is often the cheapest and fastest debt relief option. You can eliminate much of your unsecured debt within 120 days. That said, a Chapter 7 bankruptcy is on your credit report for 10 years, so that’s something to consider.
Chapter 13 Bankruptcy is a wage earner’s plan that is often a 3 or 5 year plan that is a court ordered plan. The attorney fees can be much more expensive and the trustee fees may also be more expensive.
Hopefully the debt settlement calculator above shows you the estimated cost of debt settlement compared to the cost of such alternatives like debt management, debt payoff planning, Chapter 7 bankruptcy, and Chapter 13 bankruptcy.
So based on the debt relief calculator, should you sign up for a debt relief program?
It depends. Debt settlement may be a good option for some, but definitely not for others. For example, in some cases, bankruptcy may be a more appropriate option if the debt is completely unaffordable. In other situations, you do not need any debt relief and can get out of debt on your own through tighter money management.
Regardless, the debt settlement calculator should help you make the most informed decision.