Why Debt Settlement Makes Sense in Specific Cases
Debt settlement is a strategy in which a debtor successfully negotiates to pay part of the amount owed to a creditor as a 100% clearance of their entire debt. If a settlement is reached, you only pay a fraction of the outstanding balance, with the remainder being revoked for good. This option can work for you depending on the nature of your financial distress.
Here are some benefits debt settlement can provide to debtors in distress:
Bankruptcy May be Avoided
You may prefer debt settlements with a view to avoiding bankruptcy. Bankruptcy is capable of solving your financial woes depending on your situation, but it forms an indelible dot for as long as you live. Your credit report will have the bankruptcy filing for 10 years, but many of the times you apply for a loan or job, you may be asked whether you ever filed for bankruptcy. If you lie, and the lender finds out you were once bankrupt, you may be accused of fraud. And you may lose a job for lying about it.
Done right, debt settlement can effectively help circumvent bankruptcy along with its possibly unfavorable outcomes. After seven years, your credit report will stop revealing your debt settlement. Still , no public database reveals your debt settling history, so once the credit report time bracket for the specific debt accounts has expired, you’ll never face the matter again.
Relief From Excessive Debt
When your inability to repay the money you owe creditors is genuine, you’ll find debt settlement to be relieving. The moment you’ve successfully negotiated and paid the settlement to creditors, it’s taken a relatively shorter time and smaller cost to achieve debt freedom than paying off as required under the original loan contract.
Another issue is that there many creditors who will prefer this approach to bankruptcy. In many cases, the lenders won’t get much from their debtors even if the filing is under Chapter 13 bankruptcy, compared to the prospects of settling. But any bankruptcy filing under Chapter 7 diminishes the likelihood of creditors recouping something. The people whom you owe money won’t let it come to this if there’s a better alternative, so they may want to settle.
With a proper debt settlement arrangement, you can become debt-free in 4 or even 2 years. In other words, you can get your finances in order earlier, minus the obligation of monthly or other regular payments.
Debt settlement may be your legitimate key to financial freedom sooner. Just reach out to your creditors and hammer a deal that corresponds to your existing financial situation and objectives.