Should I do it myself or use a Debt Settlement Company?
Debt is the common nightmare that almost every American is facing during present downturn in earning capacity and increased inflation
. Debt is incurred in several ways like layoffs, medical hardships or any other such issues which may lead to stress over you that effect your life in many ways. When people are in knee deep debt, the most common suggestion that every one give is debt settlement which has less impact when compared to bankruptcy on credit report.
Debt settlement is process where companies providing this type of services will try to negotiate with lenders on behalf of you to reduce the amount of debt you owe by at least 50 percent. But why do the creditors reduce the debt when they are receiving regular monthly payments from debtor. For this reason, debt settlement service provider will ask you default on monthly payments for at least 3 to 6 months before they start negotiating. Meanwhile, you deposit the amount affordable by you monthly into a savings account that will be used later to clear the debt after debt settlement.
You may be thinking why the creditor will reduce the amount you owe? It is like this, if you default on payments due to hardship and cannot affordable to pay then the last option for you to file bankruptcy. If it happens the creditor will get nothing but if he reduces the debt he may still receive something which is better than nothing. Remember that only unsecured debts like credit card debt, personal loans are handled in debt settlement.
The main disadvantage of debt settlement is that it affects credit score. In an effort to settle debt, the debtor will be asked to default on the monthly payments for 3 to 6 months which will be listed on the credit report therefore credit score gets dropped.
However while trying to settle debt; a debtor who is under pressure and going through tough time might not be able to face all the process alone. As the debt incurred with different lenders, you have to face conversation from different lenders that include collection calls from collection agencies which is very hard to handle. In this situation you might need people who stand by you and help giving advice and inspirational words in hard times.
Certainly there are advantageous of doing yourself debt settlement like you dont have to pay anybody for doing debt settlement and do not have to reveal your financial situation to others but have to face hard time as the lenders or debt collectors may behave rude towards you and require high knowledge and experience while negotiating with lender. The risk of doing it yourself surpass the advantages, therefore it is suggested you hire a debt settlement service provider to settle your debt.
Hiring a debt settlement service, you will get a professional expertise and can reduce your debt to maximum attainable because they are much more experienced and knowledgeable than you but may charge few hundred dollars for providing their service. Hiring a reliable debt settlement service provider will help you gaining maximum advantage of what you spend.
Should I do it myself or use a Debt Settlement Company?
By: Jack Bronson
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