Debt Settlement Pros and Cons
With personal debt mounting and your options dwindling, debt settlement is becoming the strategy of choice. You can hardly turn on the TV or radio without coming across an ad touting a debt settlement business. “Turn over your financial woes to us and we will do the rest”.
If you want to know about debt settlement pros and cons, the first thing you should know that this act of settlement comprises certain effect on your financial health, some of them are good but some of them are so unfavorable to be taken. In this article I will talk about the same debt settlement pros and cons which involve certain important things regarding your credit score and debt itself.
In the United States, people have different opinions about debt relief options. Some think that is nothing but a scam and no reductions are attained. However, the recent high rates at which debt relief options are being used indicate that these options are legal. However this is not a conclusion which can be drawn in all conditions. A lot of people have been fooled as a result of illegitimate debt relief options.
1. The amount that you need to pay is less that you actually owe
Usually you would only need to pay around 40-60% of the amount. This would in turn help you save on the interest.
2. Only one payment per month
If you decide to consolidate all your loans, it means that you only need to make one payment every month. Since you are dealing with one creditor now, you do not need to worry about calls from other creditors anymore.
3. You do not need to declare bankruptcy
Declaring bankruptcy can be a long and frustrating process. In this case, debt settlement is a much easier option.
4. No attorneys involved
You could perform the whole process of debt settlement yourself. Take note that you need to learn as much as you could and familiarize yourself on the procedure.
1. More risk to the lender.
2. If you default on the loan, your asset may be lost to the lender in repossession.
3. Longer time period to pay off debt.
4. During the application process, penalization fees to creditors might have to be paid.
5. Can get expensive in the long run.
6. One will remain in debt for a long time.
7. You may end up paying more in interest in the end.
8. Easier to get yourself further in debt with accessible money.
Final Tip: By researching and comparing the best credit card debt settlement services in the market, you will be able to determine the one that meets your specific financial situation. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned credit card debt advisor and money by getting better results in a shorter span of time.
The idea of using debt reduction services as a form of reducing your debt in and of itself sounds like a great idea. There are some points to consider if you are an individual who has good credit and has found himself or herself in a difficult spot financially, consider carefully before engaging in a debt reduction service. Once you do use this method, it will significantly lower your credit score, making obtaining credit more difficult. If you, on the other hand, are someone who has had a history of poor credit actually using a debt reduction service can change your bad credit rating from poor to good thus enhancing your credit status.
Before making a decision, all consumers in debt should at least talk to a debt settlement company. To find that company, use the services of a debt relief network. These networks are always on the lookout for good, legitimate companies that they find through careful testing and close monitoring. Once they find a good, legitimate company, they pass that information onto you.
Take your prompt action by searching for the best settlement company from now onwards so that you can overcome your debt issues faster.