When faced with mounting debt burden and you are about to buckle under it’s weight, several options are made available to you by a financial expert/consultant. Deciding on which option to choose to get out of debt becomes another burden on its own.
Reading this article will further expose the nitty gritty of debt settlement. What Debt settlement is? How Debt settlements work? The advantages/disadvantages of debt settlement.
What is Debt Settlement?
Debt settlement is a debt relief method in which a supposed debtor negotiates with the creditor for substantial debt reduction and subsequently pays off the renegotiated debt. It is a method often considered as a last resort instead of bankruptcy or insolvency.
How debt settlement works
For instance a debtor owing $100,000 may either, using a debt settlement company or not negotiate with its creditor to pay a one-off payment of $40,000. If the creditor accepts this proposal the debtor then pays the agreed sum and some agency fee and is then let off the hook. Please note that the creditor is not obligated to accept the proposal thus making debt settlement option a little bit complicated especially if you are in debt to more than one company.
The following are some of the advantages of taking Debt Settlement as an option:
- PAY LESS THAN YOU OWE
A major plus for debt settlement is the fact that you actually pay less than you owe which in turn might be a disadvantage on your credit report. However for someone who urgently needs a relief whatever will get you that relief and make you pay less is welcome.
- AVIODANCE OF BANKRUPTCY
Another advantage of Debt settlement is the feel good factor it gives i.e. Rather than insolvency and filing for bankruptcy, debt settlement is a better option. A debt settlement company helps you get a fair deal and works you through the process of getting out of debt using this option.
- RELIEF FROM BURDEN OF DEBT
- GET OUT OF DEBT IN LESS TIME
Using a debt management company to negotiate your way out of debt enables you to get out of debt in less amount of time. a good debt management company using debt settlement strategy will get your debt eliminated in between 2-3 years which is lesser than if you will have to pay all the debt.
Using the debt settlement option to settle your indebtedness to creditors or lenders create an overwhelming relief for debtors. A huge burden is lifted off the shoulders of people who have found themselves under the burden of debt and thus are appreciative of effort put up by debt management companies to help eliminate this debt.
In summary Debt settlement is most preferred to bankruptcy or insolvency. Working with a debt management company in other to eliminate your debt will further enunciate more advantages of debt settlement to you. A debt settlement company work you through the process and ensure you are totally debt free. A good number of debt management companies are available today endeavor to consult one