Debt settlement is an option if you need debt relief but want to avoid filing bankruptcy. Typically, debt negotiators for settlement companies will instruct you to stop paying all your debts and to place your funds in an account controlled by their company.
They will then begin to work with your creditors to settle each debt for a fraction of what you owe. Some of the advantages of this option are as follows:
- With the help of debt settlement companies like Accredited Debt Relief and National Debt Relief, you can wind up paying significantly less than the amount you owe.
- Whether you need a credit card settlement or another type of debt resolution, this option can be used to settle loans, medical collections and all other types of unsecured debts.
Cons associated with debt settlement include the length of the process, which can take months or years to complete depending on the debts you owe, as well as the fact that you’ll receive notices regarding accumulating fees throughout. Additionally, this process will affect your credit score.
In any case, debt settlement has been proven to reduce the amount owed in many instances without requiring you to go through bankruptcy proceedings if you don’t want to.
If you are interested in settling debts with a creditor or collection agency, you can either attempt to negotiate with the creditor on your own or go through a debt settlement company that will negotiate on your behalf.
These companies cannot negotiate for certain types of debt, such as student loans. Furthermore, debt settlement options are not offered for secured loans such as mortgages or auto financing.
That is because your home can be foreclosed upon and your vehicle can be repossessed should you be unable to pay your debt.
While settling a debt with a creditor can offer the benefit of ridding yourself of debt altogether, often for a reduced cost, it is not without its drawbacks. Should you choose to settle your debt for less than the amount you owed, your credit will likely take a hit.
The account will show as a debt that is charged by lenders, which will remain on your credit report for up to seven years.
By Admin –