Why Are My Creditors Not Getting Paid?

If you are enrolled in a typical debt settlement program, your creditors won’t receive any payments until a settlement agreement is reached.

Achieving a settlement agreement can take many months, even years, depending on who your creditors are, the distribution of your debt, the type of accounts you have, and the availability of settlement funds set aside over time. Your monthly payment to the program is being saved in a settlement savings account designed specifically for the debt settlement program. It should not be used for any purpose other than settling your debts. In rare situations, a structured settlement payment plan may be agreed upon where a creditor might receive payment in full for a settlement over a two to four month period. Most of the time, however, payment is disbursed to the creditor on a lump-sum basis only.

If, for some reason, it’s important to you that your creditors receive payment every month, then a debt settlement program is not going to be the right fit. You may wish to consider a consolidation loan (typically via home equity) or a consumer credit counseling service (CCCS).

There is a bigger issue at stake than simply making or not making payments to your creditors each month. It is important to consider what your long-term financial objectives are. If you wish to get out of debt in three years or less and work towards rebuilding your credit, a debt settlement program is really your only option short of filing bankruptcy.

Your credit score cannot improve as long as you are carrying large balances on your accounts (a high debt to credit ratio - see www.myfico.com/crediteducation) even if your payment history is perfect. There are many factors that go into you credit score and it imperative that you know what they are. Even though you may feel limited by not using credit cards and not applying for new credit while in a debt settlement program, taking these steps are essential to eliminating your debt once and for all.

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