Debt Settlement Explained
If you're feeling overwhelmed by unsecured debt, including high interest rate credit cards, a debt settlement program may be a good option to consider. Debt settlement is considered one of the most effective ways to eliminate your debt in a short period of time. While debt settlement will have a negative affect on your credit, and comes with certain risks, it can be a good program for those that are about to become late on their bills, or have already fallen behind on payments due to a significant financial hardship.
While debt settlement may be good for some individuals, there are multiple ways to consolidate unsecured debt that can be more appropriate. To make the smartest choice, Life House Financial feels you should always consider all options before choosing one particular solution or program over another. This is why as a standard part of our process we will help you compare side by side all debt consolidation options including debt settlement, debt management, bankruptcy and the most preferred method, a unsecured debt consolidation loan.
If you’re serious about reducing your monthly payments, we strongly encourage you to contact us today. We can help you easily understand how debt settlement works and how it can help you get the payment relief you need and deserve. We are a company dedicated to giving you truthful answers and unbiased guidance. We offer our services at no cost or obligation, which means you’ve got nothing to lose when speaking with us. Helping people get out of debt is what we do best, so get started with us today. Our debt consolidation experts are standing by ready to help.
Debt Settlement in Detail
Debt settlement sometimes referred to as debt negotiation, forgiveness or credit advocacy, takes an aggressive approach to reducing your unsecured debt. This type of debt includes credit cards, medical bills and other accounts in collections. Debt settlement can help individuals eliminate their debt within an average period of twenty-four to forty-eight months.
The process of settling debt is easy to understand. The first step in the process is finding a debt settlement company you can trust. Before hiring any company, you should read all documents and contracts thoroughly. Once a debt settlement company has been hired, they will help to communicate with your creditors and will work to reduce the overall balance of the accounts you owe. Unlike a debt management program that reduces only the interest rate you are being charged, debt settlement companies help reduce the actual account balance.
For example, if the total amount of debt you owe is $10,000, a debt settlement company will work on a settlement as low as 50% of what you owe. This means instead of paying back $10,000 plus interest, you would only pay back a total of $5,000. Please keep in mind, this is only an example and the amount your accounts may be lowered will vary from account to account. Seems how lenders are not obligated to settle at any amount, it is possible your account holders would refrain from offering any reduction whatsoever.
As you can see from the example above, debt settlement can offer big savings, and is an extremely aggressive approach to eliminating debt. Because you are paying less than what you owe, settling your debt will have a negative affect on your credit history. Because of this, debt settlement is usually only considered by those individuals who do not qualify for other programs such as debt management or a consolidation loan. Debt settlement is often considered an alternative to bankruptcy.
The Positives and Negatives of Debt Settlement
Debt settlement can be one of the most cost-effective ways to solve your debt problems, without having to file for chapter 7 or chapter 13 bankruptcy. However these savings do not come without significant risks. While setting your debt, multiple things can appear on your credit report that will greatly impact your overall credit rating. It is not uncommon for people in this type of program to have several late payments, charge-offs and collections show up on their credit. Instead of settling, your creditors may instead decide to take you to court in an effort to collect the entire amount you owe. Depending on your State laws, this action can result in a judgement and even a garnishment of your wages.
Comparing Your Debt Consolidation Options
For some people, the positive aspects of debt settlement strongly outweigh the negatives. But everyone’s case is different. Whatever your financial situation, we can’t stress enough, before moving forward with any debt relief option, you need to consider all programs available. Even more important, you should always read the full contract and any fine print before proceeding. We even suggest you sleep on it a few nights. The worst thing you can do is act fast and end up in the wrong program that will further hurt your situation.
If you would like to know more about debt settlement and all other debt consolidation options potentially available to you, contact us today. Our consolidation experts can provide you with all the information you need to make a more informed decision. Comparing your options is a smart decision, especially when it comes to consolidating your debt. To get started, click on the big orange button below and tell us about your needs. We’ll begin our work in finding you the best debt consolidation option immediately.