What is debt settlement and what are its advantages?
Among all debt relief options, debt settlement is one of the most sought-after options. You can settle your debts yourself or with the help of a third party agency.
What is debt settlement?
Under debt settlement, the amount of your overall unsecured debts is worked out and negotiations are carried out with your creditors to arrive at an agreement for eliminating or lowering a part of your outstanding balances. If you’re lagging behind on payments for your high-interest bills, it might take up to 20 years to pay off your balances. Debt settlement programs can help you cut down your repayment term and amount so that you can become debt free within 2-3 years. A substantial part of your debts is written off. By signing up for the services of a reputable settlement company, you can lower up to 60% of your original balances. You would just have to make one manageable monthly payment to the settlement company that they would use to settle your bills. The amount of this payment is decided after thoroughly evaluating your finances. The number of months for which you have to participate in a program is also worked out. When the program ends, you would be completely debt free.
What are the advantages of debt settlement?
Given below are the different advantages offered by a debt settlement program:
You can get out of debt within a period of just 24-36 months.
You can settle your high-interest bills for a much reduced amount than what you would have paid otherwise, possibly saving as much as 60% of your original balances.
It allows you to make affordable monthly payments. Because of this, a significant amount of money would be left over each month that you can use to make an emergency fund.
It takes into consideration all types of unsecured debts such as credit cards, personal loans, utility and medical bills.
Once you’ve settled all your balances, there wouldn’t be any open negative marks on your credit report.
Once you enroll, your debts are not subject to any legal or collection proceedings.
On many occasions, your creditors would re-age your accounts and their current status would be reinstated. This is healthy for your credit score.
Your late fees and over limit fees are eliminated.
This process doesn’t require so much paperwork like bill consolidation. No credit check is necessary.
You can prevent creditor harassment and unfair collection practices and get back the control over your financial life.
One monthly payment helps you simplify your budget.
You don’t need to file bankruptcy to handle your situation.
