Is Debt Settlement a Viable Debt Relief Strategy?
Many Americans are struggling with large amounts of credit card debt. According to the average American household has over $7,000 outstanding on their cards and that amount increases to over $15,000 if you only look at indebted households. Not being able to pay your bills for one month can send you into a bad downward debt spiral that may seem impossible to escape. If you have more debt than you can pay back, debt settlement may be an option to relieve the financial burden without having to file for bankruptcy. Although it is not for everyone, debt settlement comes with many advantages.
Although you will be paying fees to the debt relief company handling your settlement, debt settlement actually helps you save money because it can cut down your total principal debt by up to 50 percent. Debt consolidation or debt management will both help you to reduce your monthly payments, but you still end up paying a lot of interest because you have a larger total amount to repay. As debt settlement also stops the endless cycle of credit card payments, you can actually start to put money away again.
Compared to other debt relief methods, settlement doesn't take as long. Through debt settlement, you can be financially independent within a year to 36 months, giving you the opportunity to start afresh.
Through bankruptcy your financial details are disclosed publicly. When you go through debt settlement, your details are treated as confidential.
In society, a social stigma still surrounds individuals who go through bankruptcy. They are considered to be ineffectual with managing money, which often leaves them with low self esteem issues. Negotiation leaves you feeling more in control of your finances, knowing that you can still fulfill your financial obligations.
Negotiating with your creditors during debt settlement gives you more flexibility in how you make your monthly payments. If the creditor is willing, payments can be adjusted according to your situation.
Avoid Legal Action
As soon as you stop paying your bills on time or in full, your creditors may try to take legal action against you. However, if you manage to come to an agreement with your creditors through debt settlement, it may prevent any further legal action. Debt settlement companies such as are usually already in good standing with creditors and in a better position to negotiate on your behalf.
As soon as you join a debt settlement program, you don't have to deal with your creditors yourself anymore. This saves you the stress of going through constant harassment from those creditors to pay up.
Other strategies such as debt management and debt consolidation are perceived to be better for your credit score than debt settlement and this may be true, but if you keep missing payments because neither of these strategies work for you, you are going to end up with a bad score regardless. Compared to compounding debt because of interest and late fees, debt settlement leaves you with a better credit report.