Debt Settlement: The Pros And Cons
Debt settlement refers to the process of clearing your debt with creditors for less than what you owe. Settling with your creditors is considered the quickest and least expensive route out of debt, and represents perhaps the best option for anyone seeking urgent debt relief.
But it’s not for everyone. As with any debt solution, there are advantages and disadvantages to debt settlement. Whether it’s right for you depends largely on your credit history, and the urgency of your financial circumstances.
So You’re In Over Your Head. Now What?
If your credit report remains solid, and you’re still able to make at least minimum monthly credit card payments, a debt settlement solution is likely not for you. In that event you would almost certainly prefer a debt management solution.
But if you’re looking for urgent debt relief, and can still afford to make at least 60%-70% of your minimum monthly payments, then debt settlement just might change your life, as it has for millions of people struggling to cast off the burden of debt and re-establish a balanced financial life.
How Much Can Debt Settlement Help?
A good debt settlement company can reduce what you owe by 30%. The best ones can save you even more, sometimes up to 50%. But it’s important to realize that a creditor has no legal obligation to negotiate your outstanding debt, so there are no guarantees.
However, as a debtor you have one important advantage: Creditors realize they are likely to recover more money through debt settlement than by referring your debt to a collection agency or law firm. This gives you a solid foundation on which to open discussions with a creditor.
Should You Hire A Debt Settlement Company?
They say you can’t fight city hall, but, yes, sometimes it’s possible to bring a credit card company to the negotiating table.
If you’re patient with a process that, admittedly, often tests the limits of one’s emotional endurance, then petitioning your creditors for a debt settlement could save you thousands of dollars, while eliminating your credit card debt at the same time.
In addition to patience, though, you’ll need persistence, particularly if you intend to negotiate debt settlement yourself. Credit card companies have six ways from Sunday of dissuading you from pursuing your settlement objective, or discouraging you with hardball negotiating tactics to the point of causing you to give up and file for bankruptcy.
An experienced debt settlement company does not get intimidated. It also has the time it takes – up to two years sometimes – to make the repeated calls to your banks and creditors to negotiate your debt down to sometimes 50% of what you owe.
This time commitment, combined with the experience and acquired knowledge of expert negotiators, works to your benefit, enabling them to strike the most advantageous settlement balance possible for you.
Will Debt Settlement Affect Your Credit?
If you’ve reached the point where you’re petitioning creditors for a debt settlement then your credit score has almost certainly already declined. But one of the misconceptions about the process is that debt settlement will accelerate this decline.
What we’ve found is that although your credit score may initially go down, once your debt has been settled your score will start to increase quickly. In six months your credit score will likely be equal to, or even higher than, what it was before the settlement process began.
Debt settlement is not only a legal and ethical means of securing debt relief, it’s also a necessary solution for those who can’t otherwise afford a credit counseling program, or who wish to avoid bankruptcy.
If you’re still able to make at least 60%-70% of your minimum monthly credit card payments, then a debt settlement solution has the power to free you from debt within 24-48 months – faster than any other debt-relief option available.
About Level Financing
Level Financing’s credit counseling team invites you to develop a customized plan of attack for wiping out your entire credit card debt, and lowering your monthly payments to a fraction of what they were – in a fraction of the time it might take for you to do so on your own.