Debt Settlement

Debt Settlement

Settle for Less with Debt Settlement

Okay, we will acknowledge that telling someone to settle for less isn't always the best idea. But when it comes to debt, debt settlement does just that. First you have to be sure you have to have a significant amount of money saved. It doesn't have to be enough to pay everything off in full, just at least 30-50% of what you owe. You see, when you enroll in a debt settlement program, you can get 60-80% knocked off the amount you owe. The amount knocked off depends on the negotiating skills of the debt settlement agent working on your side. Ideally, they can get the amount reduced to what you actually have in savings. Then once you pay that amount off, your debt is considered settled and you're in the clear.

Pitfalls of Debt Settlement

If you think debt settlement is too good to be true, you might be right to an extent. First of all, your creditors might not agree to reduce the amount you owe to the amount you actually have saved. But in those cases, they might give you 1-3 years to pay it off. But still, you might be wondering why creditors agree to let you pay back less than what you actually spent. It's because they figure if you're at the point financially where you've hired a debt settlement company, they know your next step might be non-payment, and they figure that something is better than nothing, so they go ahead with it--with the understanding that you pay immediately in most cases.

And you aren't in the clear yet. Generally, these creditors won't want to lend you credit again. And they'll report your participation in a debt settlement program to the credit reporting agencies, which will effect your credit report in much the same way as a late payment would. If there are five different creditors reporting this, it will be similar to having five late payments on your account. See?

As you can see, the decision to enroll in a debt settlement program should not be taken lightly. Give it some time, thought and consideration first.

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