Debt settlement help – Can settlement really help you to handle debt
Amongst the various debt relief options, debt settlement is perhaps the most sought after option. This is because, it lowers the outstanding debt amount and so it becomes easier for you to pay off your debts. If you are having financial problems and if this is affecting your debt payments, you can go for debt settlement. You can settle the bills on your own, or else you can seek debt settlement help from a debt settlement company.
Why people go for debts settlement
People go for debt settlement since it lowers the outstanding debt amount that a debtor owes to his creditors. However, the question that you should ask before opting to settle your bills is that if it really helps you in paying off your debts and becoming debt free.
The very first thing that you should know about debt settlement is that it hurts your credit score. This is because, you are required to miss payments before you can actually settle your debts. When you miss payments, this gets listed on your credit report and is there to stay on the report for 7 years. This hurts your credit score. If you do not miss some payments, the creditor won’t even believe that you are actually having financial problems. So, you will have to miss payments in order to prove that you are in real financial stress.
Moreover, not all creditors agree to settle your debts. In addition, if the account gets handed over to a collection agency it becomes all the more tough to settle the debt with them.
Another thing that you should know about debt settlement is that, you cannot settle your secured debts. Thus, if you are having financial problem, debt settlement can’t be of any help in case of your secured debts.
Again, if you go for debt settlement help to a debt settlement company, you can even get scammed. The settlement companies are not always reliable and authentic. They can charge you high fees for their services and even charge upfront fees. They can go away with your money and aggravate your debt problems. They can even keep your money with themselves and not disburse it amongst your creditors. In that case, your debt amount will increase and the situation will worsen. The creditors can even sue for non-payment of the bills. You should know that the debt settlement companies cannot charge upfront fees as per the FTC regulations (2010) and are also required to discuss with you about the effects of the settlement on your credit.
So, debt settlement can be of some help to you if you are in dire financial problem when you are left with little money to sustain yourself. Otherwise, you can try out other debt relief options like debt consolidation or debt management. It is also important for you to be aware of your rights as a consumer.