When a debt begins spiraling out of control, it can quickly become overwhelming. Whether you only have a few thousand you need to pay off or you’re looking at a total repayment amount of tens or even hundreds of thousands of dollars, not being able to return what you owe can make life extremely difficult.

But if you’re a resident of Rhode Island, you don’t need to be drowning in your monthly debt payments. Debt settlement can allow you to get out from under the weight of money you owe, giving you the ability to focus on rebuilding your financial health.

If you feel like there is no hope for getting out of your debt, here are a few key points about debt settlement that you should understand.

What is Rhode Island Debt Settlement and How Can It Help?

The debt settlement process allows you to renegotiate the terms of what you owe so that you make lower monthly payments each month. Through negotiating a “settlement” amount, you can pay a lower total amount than if you continued on your current repayment path.

Debt settlement allows you to pay less overall, saving you money in the long run. If your creditor feels that you will be unable to pay back the money you owe them, they may opt for a smaller amount.

However, debt settlement is not a decision you should take lightly. Although it may seem beneficial to settle your debt for a smaller amount than what you owe, debt settlement can hurt your credit score. Depending on the pathway you take to get to a settlement amount, debt settlement may be just as harmful to your credit score as filing for bankruptcy.

Settling Your Debt in Rhode Island

Rhode Island may be the smallest state in the country, but it is among the top 20 wealthiest states. On average, Rhode Island residents have a higher salary than the majority of other states in the country. However, many Rhode Island residents still struggle to control their debt and meet their monthly minimum payments.

But before you apply for debt resettlement, you need to ensure the creditor is within the statute of limitations for the debt. If you have a debt that is unpaid, your creditor only has a certain amount of time in which they can take you to collections. If they do not act within that time period, you are no longer responsible for the debt.

In Rhode Island, the statute of limitations for a debt depends on the kind of debt and the contract around the debt. For most contracts or accounts, the statute of limitations is 10 years.

Who is Debt Settlement Right For?

As we already mentioned, debt settlement is not for everyone. If you’re able to repay your debts, then you won’t have any benefit settling your repayment amount. You may save some money, but your credit score can take a severe beating.

Debt settlement is recommended for individuals who are unable to meet their minimum monthly payments on a specific debt. Those individuals should consider their other options, such as filing for bankruptcy, before deciding if debt settlement is right for them.

Individuals can come to a settlement agreement with a credit card company or loan provider on their own. If the individual is able to renegotiate the amount of their debt without the assistance of debt settlement program, they may save themselves points on their credit score. However, a debt settlement program may be more successful in lowering the repayment amount.

What Kinds of Debts Can Be Settled?

Debt settlement is not an option for all kinds of debts. Secured debts, such as mortgages or title loans, cannot be reduced through debt settlement. Certain personal loans and student loans are also not viable options for debt settlement.

If your debt is an unsecured debt, such as a credit card, you may qualify for a debt settlement program. In the state of Rhode Island, you will need to have over $7,500 in credit card debt or another form of unsecured debt if you would like to settle your debt.

Settling your debt can give you the financial freedom you need to start fresh. If you feel like there is no relief in sight for the money that you owe your creditors, debt settlement may be the process you need to get control of your finances again.

Always talk with a professional before applying to a debt settlement program. Be sure that you understand the process and the consequences that come with settling your debt and know what your other options are. For many people across Rhode Island, debt settlement has been exactly what they needed to start their financial history over again.