Should You Settle Your Debts To Get Out Of Debt?
Many people often wonder what the best way to get out of debt is
. For some it is using credit counseling, whereas for others it a debt settlement program. These are by far the two most common (and popular) methods of debt relief, and while both methods can work extremely well, they are both best suited to people in different sets of circumstances.
A debt settlement (also sometimes known as a debt negotiation) is all about getting out of debt in the shortest possible amount of time. Because of this, it is favored by many. It's basically a settlement between you (the person who owes the money) and the person(s) you owe money to. In many cases it involves you showing them that there is no real way that you can pay back the amount of money owed with the current interest they are charging, so the two parties (i.e. you and them) must strike a deal.
Each debt settlement is a separate negotiation between real people, so it is very difficult to predict the outcome. At the end of it, both parties will have agreed on a reduced balance that is to be paid monthly. These monthly are only based on what you can afford, so as long as you stick to them you won't have any further problems.
This process of settling your debt with your creditors is something that should never be rushed, since it can affect the rest of your life in a major way. Many people like to bring a lawyer along with them to help them out (and for advice), while others like to hire a debt settlement company to go through the negotiations for them. The problem with using a company such as this is that it'll cost you extra money (as will a lawyer), since they usually process their fees into your monthly payment.
Debt settlements are preferred in many cases to credit counseling because they allows you to get out of debt a lot quicker and to reduce the amount that you have to pay each month. Saying this, your level of interest that you have to pay is nearly always higher than if you were to use credit counseling.
Another major negative aspect of a debt settlement is that you'll harm your credit score, but for some people this is a necessary move so they must live with the consequences.
by: Marjorie Salada
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