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. As long as the creditor is satisfied, you only repay a percentage of what’s owed, with the rest of the debt being offset entirely. 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
Circumventing bankruptcy may compel people to settle their debts. Bankruptcy is capable of solving your financial woes depending on your situation, but it forms an indelible dot for as long as you live. While your bankruptcy entry is removed from your credit report after 10 years, most applications for work or credit will require you state if you ever applied for bankruptcy. If your response is no, but the bank discovers later that you did file bankruptcy, charges of fraud may follow you. And you may lose a job for lying about it.
When you settle debts with your creditors the right way, you won’t have to file bankruptcy or deal with its potentially devastating outcomes. Debt settlement features on a consumer’s credit record for only seven years. 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.
Break From Too Much Debt
If you have a legitimate reason for not being able to repay what you owe, then debt settlement is a viable way out. 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.
Equally relevant, a good number of lenders are well-disposed toward settling rather than 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 majority of such creditors will want to avoid this in case there’s a more viable way out, so they may accept your offer.
With a proper debt settlement arrangement, you can become debt-free in 4 or even 2 years. That means you’re able to start reorganizing your finances sooner without the burden of paying out any amounts on a pre-agreed schedule.
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.