Money Ladder Recovery Loan Reviews: Everything You Need to Know

If you’re struggling with overwhelming credit card or other unsecured debt, a debt settlement program like those offered by Money Ladder may seem like an attractive option. But how does debt settlement really work, and will it leave you better or worse off?

In this in-depth guide, we’ll take an honest look at Money Ladder and other debt settlement programs. You’ll learn

• How debt settlement companies like Money Ladder work
• The pros and cons of debt settlement
• Key things to know before enrolling in a debt settlement program
• Money Ladder reviews from real customers
• Alternatives you may want to consider first

After reading, you’ll have a solid understanding of debt settlement and whether Money Ladder’s recovery loan program is right for your situation. Let’s dive in!

How Does Debt Settlement Work?

Debt settlement companies like Money Ladder negotiate with your creditors to settle debts for less than you owe. The process typically works like this:

1. You stop making payments to creditors and instead make monthly deposits to a dedicated account. This helps you save up enough to make settlement offers.

2. After you’ve saved enough, the debt settlement company starts negotiating with your creditors. The goal is to get them to agree to accept a lump sum payment that is less than the full balance owed.

3. If a creditor accepts the offer, the debt settlement company uses funds from your dedicated account to pay the settlement

4. Once all your debts have been settled, you’ve completed the debt settlement program.

It’s important to understand that when you stop paying your creditors you will become delinquent on those accounts. This will cause damage to your credit score. However debt settlement may stop collection calls and prevent legal action like wage garnishment.

The amount of savings varies, but clients typically settle debts for 40-60% less than they owe. So if you owe $10,000 across multiple cards, you may pay only $4,000 – $6,000 to settle all of the balances.

Debt settlement seems straightforward. But how well does it really work for most people who try it?

The Pros and Cons of Debt Settlement

Debt settlement can be an effective solution, but only for certain types of clients. Understanding the pros and cons will help you decide if it’s right for your situation.

Potential Advantages

• Settle debt for less than you owe. This is the biggest benefit – debt settlement provides an opportunity to resolve what you owe at a significant discount.

• Avoid bankruptcy. For some clients, debt settlement is preferable to filing Chapter 7 or Chapter 13 bankruptcy. It helps them avoid the severe hit to their credit.

• Stop collection calls and lawsuits. Once enrolled in a debt settlement program, you can refer creditors to the settlement company. This helps halt harassment from collectors.

• Affordable monthly payments. Instead of minimum payments across multiple accounts, you make one monthly deposit to your dedicated settlement account. For some, this greatly reduces the monthly burden.

• Become debt-free faster. Debt settlement shortens the time until you are free of debt compared to simply maintaining minimum payments.

Potential Disadvantages

• Fees. Debt settlement companies charge fees, which are typically a percentage of the debt amount (often around 15%). This reduces the savings clients receive.

• Tax consequences. If a creditor forgives $600 or more of debt, that money may be taxable income. This results in a tax bill you’ll need to plan for.

• Credit damage. Missed payments and settled accounts will devastate your credit, and the impact can remain for 7 years or more. This makes debt settlement unsuitable for anyone who needs to obtain financing in the near future.

• Risk of lawsuits. Although rare, some creditors may file a lawsuit or attempt wage garnishment even though you are in a debt settlement program.

• Not all debt may qualify. Most debt settlement companies focus on unsecured debt like credit cards. If you also have student loans or secured debts, these would need to be addressed separately.

As you can see, the potential savings of debt settlement come with considerable risk and downsides. It’s vital to understand if the benefits outweigh the costs based on your specific financial situation and goals.

4 Things to Know Before Settling Debt

If you move forward with debt settlement, be sure you know the following:

1. Your credit score will plummet. As mentioned above, your score will rapidly decline by 100 points or more. Be prepared for the damage and have a plan to eventually rebuild credit.

2. Not all creditors will settle. Creditors have no obligation to accept settlement offers. Be realistic – there’s a chance not all of your debts will be resolved through debt settlement.

3. You’ll still owe taxes on forgiven debt. If a creditor settles a debt of $600 or more, expect to receive a 1099-C reporting the forgiven amount as taxable income. Factor this into your budget.

4. Results take time. It can take 12 months or longer to complete a debt settlement program. And creditors will aggressively pursue you until settlements are reached. Make sure you can withstand the process.

Going in with realistic expectations helps ensure debt settlement delivers the results you expect. Don’t assume all of your debt will magically disappear.

What Do Customers Say in Money Ladder Reviews?

Money Ladder has generally positive online reviews from customers, including an excellent 4.9 out 5 star rating based on 125 reviews at the time of writing on Trustpilot.

Positive Money Ladder reviews highlight:

• Friendly, patient customer service when explaining the debt settlement program.

• Affordable monthly payments that feel manageable.

• A feeling of relief from finally addressing overwhelming debt.

• Confidence the program will help them resolve what they owe.

Negative Money Ladder reviews are less common but mention:

• Frustration with information not fully explained upfront before enrolling.

• Creditors taking negative actions like account closures and calls to employers.

• Concerns over impacts to their credit.

• Confusing or inconsistent information provided by different company representatives.

What are the Alternatives to Debt Settlement?

If you have concerns after understanding how debt settlement works, you may want to explore alternatives like:

• Credit counseling – A credit counseling agency can help you set up a debt management plan (DMP) with reduced interest rates and a single monthly payment. This avoids damage to your credit.

• Debt consolidation loan – Banks and credit unions often offer debt consolidation loans with fixed rates, allowing you to pay off multiple debts under one new loan. This streamlines monthly payments while protecting your credit.

• Balance transfer card – For credit card debt, a 0% balance transfer credit card lets you move balances from high-rate cards onto a single card with an intro 0% APR for a period of time (usually 12-21 months). This reduces interest costs without hurting your credit.

Each option has pros and cons to weigh against your financial situation. It pays to understand your full range of alternatives. Debt settlement through companies like Money Ladder offers a proven process for becoming debt-free, but also comes with considerable risk and downsides.

The Bottom Line: Is Money Ladder’s Program Right for You?

Debt settlement delivered by companies like Money Ladder can be an option for certain consumers who have unsecured debt they cannot pay off through traditional methods. It provides a way to resolve debts for significantly less than you owe.

However, the damage to your credit and finances can be severe. Debt settlement works best for those who need urgent debt relief and are willing to accept the consequences. For many consumers, credit counseling or debt consolidation may be safer options to pursue first before considering settling debt.

Carefully consider all alternatives before choosing debt settlement. And if you do decide it’s your best option after understanding the risks, be sure to choose a reputable provider like Money Ladder that has a proven track record of delivering results for clients.