Debt settlement is often thought of as the best way to pay off multiple debt. There are many pros and cons associated with this debt relief method. For many people, debt settlement is the only option that seems to offer a realistic way out from under the multiple debt they are facing. In this article, we will look at some of the advantages of debt settlement, as well as how to learn more about debt relief in Tucson, AZ.
One of the major advantages of debt settlement is that it offers a one time payment that is much lower than the combined amount of payments that you would receive if you filed bankruptcy. Debt settlement is often a negotiated settlement with the issuer of a debt. Commonly, debt settlement companies will settle for a fraction of the debt amount: maybe around forty to sixty percent. The terms of these settlements are usually set in writing when negotiations are completed. While there are potential risks associated with settling your debt, such as having the remaining balance go to the collection agencies, debt settlement has proven to be a viable option for many people.
Another advantage to debt settlement is that it may not appear on your credit report. This is good because it means that you are taking steps to establish a new credit history. A settlement will improve your credit score, but there is no guarantee that it will stay that way. It is better to have a slight credit score hit than a black mark all over your report that stays with you for seven years. Using a professional debt settlement service to negotiate your debts will help get your credit back on track and raise your score.
With a debt settlement agreement in place, you will be able to pay the outstanding amounts quickly, which will save you money on late fees and over-limit charges. By negotiating with your creditor, you can ask for discounts on the outstanding balances. If the creditor agrees, he may reduce your interest rates or eliminate the penalty fee. Most creditors would rather work with you rather than receive no payment at all than let you go debt free. In this case, you can ask for lower payments that will allow you to make them more quickly.
Once the negotiations are completed, you will be left with one final decision-whether to use the debt consolidation loan offered by your creditor or continue with the debt settlement agreement. Many creditors are willing to work with you and offer a new loan to cover the total amount of your debt, allowing you to repay the debt relief company instead of your creditors. In some cases, you may be able to pay off your debt without using a new loan, but it is advisable to use a new loan so that you will not have any more credit card charges once the debt consolidation is complete. You will also avoid accruing more debt.
Before agreeing to a debt settlement or debt consolidation loan, consider debt settlement. You may be eligible for a substantial reduction in the total amount due and you may be able to get an immediate freeze on the charges on your credit cards. If you cannot qualify for debt settlement, you may want to consider debt consolidation. You will now only have one loan with one monthly payment to make, which makes managing your finances much easier. The choice is yours.