The big questions answered about debt settlement

While debt settlement can be one of the better avenues for debtors to take to get debt relief, just like any other debt relief method there are a few of off putting aspects to it which a debtor needs to understand before going through the process of credit card debt settlement. But like anything else in life it does come with it’s individual pros and cons.

First let us unveil the cons.

1. In most situations your FICO credit score will decline. No original creditor will be willing to make a negotiation until you have fallen behind for at least a couple of months. So when you are past due your FICO credit report will take a unfavorable decline. However the negative remarks from debt settlement are able to be corrected, a decent credit repair agency can get those negatives taken off your credit report.

2. Persistent calling from debt collectors. As you can envision you will receive phone calls in an attempt to collect the debt. Depending on what organization you employ for credit card debt reduction, collection activity can be greatly reduced if not stopped altogether. But you will receive calls to some degree.

3. There are the potential for lawsuits. This is always a possibility, while it does not occur anywhere near as much as one might think it does happen. Again with a legitimate organization this process can be delayed so a settlement outside of court can be reached. When you are being sued the creditor suing often knows that they will not collect the full balance and the creditor is usually very willing to make a settlement.

Now lets take a look at the positive aspects of debt settlement.

1. The fantastic savings! You can realistically look to save between 40-50% of the amount of debt you owe. Not only will you save money off of your current balance, but you must take into consideration the amount of money you would be losing through monthly minimum payments and high interest.

2. Get out of debt quickly. Of all the credit card debt relief avenues, settlement will put you on the fasted route to becoming free of your debts. You can be looking to get out of debt within 3 years or less. This is a far cry away from how long it would take to be out of debt through monthly minimum payments.

I personally feel the pros do heavily outweigh the con’s. Nothing is worse than forfeiting hundreds if not thousands of dollars every month for what can be decades through monthly minimum payments and high interest. Credit card debt is death to your finances. How in the world can you save or invest for the future when you are scrapping to get by each month to stay up to date with your credit cards.

Steve Bis is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt settlement.

- Steve Bis

 Mail this post
StumbleUpon It!

Leave a Reply