The Pros and Cons of Debt Settlement

The Pros and Cons of Debt Settlement

For those who are deep in debt, life can be a daily nightmare. Your nerves are constantly on edge and just about the time you think you can sit down and relax, the phone rings and it’s a debt collector on the other end asking for money you don’t have. You might even completely avoid the mailbox because you know it’s just another bill with interest and late fees. In some cases, you may have even tried to explain your situation and begged your creditors to work with you, but coming up with an agreement you can manage seems nearly impossible. Suddenly, debt settlement starts to look very appealing. In truth, it may be the answer for you, but it’s best to learn some of the details before making any decisions.

Only Effective if You Can Pay Your Bills

Debt settlement usually requires contacting creditors and negotiating the terms of your debt. Your balance may end up being reduced, and the creditor might agree to deduct fees that had been attached to the overall amount owed. Although debt settlement can often help you save money on your balances, it isn’t entirely effective if you are in a situation where you simply don’t have the money the creditors are requesting.

You Can Try Settling Debts Yourself

Many consumers aren’t aware that they can actually contact creditors and negotiate lower terms themselves. This is only effective, however, if you are prepared to make the payments the creditor agrees to. If you are in debt and don’t have any extra funds to pay your bills, no matter how low you negotiate them to, debt settlement isn’t for you. In this situation, your best bet is to file bankruptcy and in order to ensure it’s filed properly, and you receive the best possible outcome, you will need a bankruptcy lawyer. One of the biggest differences between debt settlement and bankruptcy is you should not attempt to manage a bankruptcy case on your own.

Debt Settlement Less Effective than Bankruptcy

Further, you have to consider the negative impact that debt settlement can have on your credit rating. Not only can it appear to other creditors as worse than filing bankruptcy, but it’s a more drawn out process, and can affect your credit longer. If you find yourself considering which option is best for your situation, you may want to consult a qualified debt lawyer who can help you figure out the best way to deal with your debt.

When it comes to debt settlement and other bankruptcy alternatives, you have to take an honest and close look at what you are realistically able to handle. You may think it’s best to exhaust all other options before filing bankruptcy, but this can often cost you more and affect your credit rating longer. Not to mention that it might take longer to get to the point where you can start over if you try the alternatives first.

Share your experience with bankruptcy alternatives like debt settlement in the comments. Don’t forget to share the post with friends and family who may be wondering if debt settlement is for them.

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