The Importance of Considering Debt Settlement When the Debt is Just Too High
Author: Frederick Erickson
In this economy, millions of people have, through no fault of their own, become trapped under a tremendous burden of debt. If your obligations exceed your ability to repay, there are really only a few choices available to obtain relief from that debt. But fortunately, relief is indeed available - for those who want it.
The most effective option available for people who are dealing with multiple past-due accounts is the option of debt settlement. Other options include credit counseling plans which typically benefit the creditor far more than you, with no reduction in payments the typical result. One also has the option of filing for bankruptcy, but this option may not be as beneficial to you as debt settlement, as your credit will be impacted for far longer.
All of these debt relief options have pros and cons. This article will focus on the importance of considering debt settlement as an option, and assist the reader in determining whether or not this option is in his or her best interest, or if he would be better off in considering one of the other options.
The most important factor to consider is whether or not one has been making their payments. If you have failed to make payments for three or more months because you simply can't service the amount of debt you have, but you could afford a lower amount, then you should probably consider choosing a debt settlement program.
The big advantage of utilizing the services of a debt settlement company is that they are able to negotiate with your creditors and lower the debt amount. When using this method, your credit report will not show paid in full but instead, it will show paid by settlement. Your payment history and what ever else is stated on your credit report effects the application of any future loan, but the fact that you settled instead of filing for bankruptcy will be less damaging to your future credit.
If you do choose the debt settlement route, it is very important to have the negotiated amount of money in a separate bank account in order to pay off your loans. Credit companies are more willing to negotiate the amount of debt with those who have the amount of negotiated money available. If you don't have the cash on hand, a good debt settlement company will typically set you up on a 2-3 year deposit program, which will enable you to build up the amount negotiated to pay off your creditors for the reduced amount owed.
If, however, you are paying your debts on time, but struggling, then you may wish to consider debt counseling instead. Your payment will be the same, but your debt will be paid off sooner. Keep in mind, however, that most consumer credit counseling firms are actually owned by credit card companies, and they are looking out for their best interests, not yours. Using debt counseling won't have quite the impact that debt settlement will on your credit, but be sure you can afford the payments without undue hardship.
Alternatively, if you can't afford even a reduced payment, due to unemployment, medical expenses, or any other cause, then you should probably consider the option of filing for bankruptcy. There has been a lot of press that the new bankruptcy laws perform means-testing, but the truth is that if you can't afford your bills, you'll qualify for a discharge. Judges favor debtors, not creditors, and with so many filing these days, your day in court will last all of 5 minutes - it really is quite painless, and the biggest part is simply getting all the paperwork together for the lawyer.
Regardless of what you decide, the most important thing for any person who is struggling financially is to deal with their money problems directly. You aren't alone - millions of others are struggling as well, and there is no shame or stigma attached to acting in your own financial interest. You don't need to continue floundering financially, and once you decide to act, can procure the services of professional debt settlement companies immediately - and end the harassing phone calls forever.About the Author:
With this economy, many people are struggling financially. Don't fall prey to predatory lenders - we can help you find legitimate resources and provide you with the tools needed to manage debt and credit effectively. For more information on debt settlement companies, credit repair, bad credit loans and loan modification, please visit http://www.CureMyBadCredit.comArticle Source: - The Importance of Considering Debt Settlement When the Debt is Just Too High