Debt Settlement: Why it May be a Good Option
Debt settlement is a kind of plan where a debtor negotiates with their creditor to agree to a partial payment as total fulfillment of the debtor’s obligation. Once your creditor has agreed, you only clear a proportion of the amount owed, and the balance is cancelled permanently. This strategy has many benefits based on the kind of financial situation a debtor is experiencing.
Here are some benefits debt settlement can provide to debtors in distress:
You May be Safe From Bankruptcy
You may prefer debt settlements with a view to avoiding bankruptcy. While bankruptcy is a viable debt solution in certain cases, it’s a mark that will stay with you for the rest of your life. 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. You could also be fired for not telling the truth.
When you settle debts with your creditors the right way, you won’t have to file bankruptcy or deal with its potentially devastating outcomes. After seven years, your credit report will stop revealing your debt settlement. Again, public records will not show you settling any debts anywhere, and after the credit report time limit for your settled accounts has elapsed, this issue is forgotten forever.
Break From Too Much Debt
Settling your debts with creditors is a practical solution especially if you have valid explanation for not paying back your debts. Once the settlement is paid as negotiated with your creditors, you become free of debt within a shorter duration and at lower costs compared to trying to pay off as per the initially agreed plan.
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. And if you file Chapter 7 bankruptcy, the prospects for recovering anything are small. 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.
It’s possible to settle your debt obligations in two to four years if you’re on a well-structured debt settlement program. The major implications to you are the quicker restoration of financial stability, leaving behind the overwhelming regular debt repayments sooner.
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.