Debt Settlement: Why it May be a Good Option
Debt settlement is a strategy in which a debtor successfully negotiates to pay part of the amount owed to a creditor as a 100% clearance of their entire debt. As long as the creditor is satisfied, you only repay a percentage of what’s owed, with the rest of the debt being offset entirely. This strategy has many benefits based on the kind of financial situation a debtor is experiencing.
Below are examples of merits of debt settlement to overwhelmed debt consumers:
Bankruptcy May be Avoided
You may prefer debt settlements with a view to avoiding bankruptcy. While bankruptcy is a viable debt solution in certain cases, it’s a mark that will stay with you for the rest of your life. Your credit report will have the bankruptcy filing for 10 years, but many of the times you apply for a loan or job, you may be asked whether you ever filed for bankruptcy. You may be considered guilty of fraud for denying that you once filed bankruptcy after your lender proves otherwise at some point. You could also be fired for not telling the truth.
When you settle debts with your creditors the right way, you won’t have to file bankruptcy or deal with its potentially devastating outcomes. Debt settlement features on a consumer’s credit record for only seven years. Still , no public database reveals your debt settling history, so once the credit report time bracket for the specific debt accounts has expired, you’ll never face the matter again.
Break From Too Much Debt
When your inability to repay the money you owe creditors is genuine, you’ll find debt settlement to be relieving. After you and your creditors have agreed on a settlement, you walk into debt freedom in a lesser time and cheaper than possible if you had attempted to repay following the original schedule.
Equally relevant, a good number of lenders are well-disposed toward settling rather than bankruptcy. There’s a high possibility that a creditor what recover as much of the amount owed as would be possible with debt settling, no matter if this is a Chapter 13 bankruptcy scenario. In case you’re filing Chapter 7 bankruptcy, the creditors have little hope of salvaging anything. The majority of such creditors will want to avoid this in case there’s a more viable way out, so they may accept your offer.
With a proper debt settlement arrangement, you can become debt-free in 4 or even 2 years. The major implications to you are the quicker restoration of financial stability, leaving behind the overwhelming regular debt repayments sooner.
You may legally walk away from your debts by settling. You only need to approach your creditors and negotiate terms that suit your current financial position and goals.