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hello, I’ve seen where so many debt settlement companies say ‘if you owe 10K or more……’ I owe $9812.00 today in unsecured debt. What changes at $10,000? thank you for your help

Good question. Most debt settlement companies use $10,000 as their cutoff point as their fees are based on the debt amount you have and once you get much below $10,000, the costs for them to service your account over the 24-36 month period becomes less profitable for them…It’s just business.

However, there are also these arguments which also have merit as to the $10,000 minimum:

1. The total amount they can save you becomes less significant below $10,000 once their fees and the IRS taxes owed (on the savings) are taken into consideration. So, on average, your cash out of pocket is not reduced all that much (assumming a settlement of 50-60% of your debt amount)

2. With debt below $10,000 the question has to be asked, “is your situation bad enough to justify debt settlement?” Debt settlement has its risks and drawbacks which you may not want to take on with a lower debt amount as there might be a better debt relief alternative for your situation. Debt management is one such alternative.