What happens after you miss a debt settlement payment?
Summary
Missing a payment on a debt settlement plan can cause problems like canceling the agreement and restarting debt collections. The consequences depend on the type of agreement and how quickly the person responds after missing a payment.Key Facts
- Debt settlement helps people pay less than they owe by agreeing on a lower lump sum or structured payments.
- Payments must be made regularly into a special account to fund the settlement.
- Missing a payment can cancel the agreement, bringing back the full debt amount.
- Creditors may restart collection efforts, including calls, letters, or legal actions like wage garnishment.
- Fees paid to debt settlement companies are usually not refundable if a payment is missed.
- Missing payments can hurt a person’s credit score even more.
- It is important to contact the creditor or settlement company immediately after missing a payment.
- Some creditors might allow payment extensions or changes if contacted quickly and consistently paying before.
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