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. If a settlement is reached, you only pay a fraction of the outstanding balance, with the remainder being revoked for good. Many debtors find this approach advantageous in many ways depending on their specific financial circumstances.
Let’s take a look at some advantages of debt settlement to debtors in financial trouble:
Bankruptcy May be Avoided
A lot of debt consumers choose settlement as a way to evade bankruptcy. While bankruptcy is a viable debt solution in certain cases, it’s a mark that will stay with you for the rest of your life. Your credit record will stop bearing your bankruptcy information after 10 years, yet, you may have to indicate if you ever declared bankruptcy each time you seek a loan or employment. If your response is no, but the bank discovers later that you did file bankruptcy, charges of fraud may follow you. You could also be fired for not telling the truth.
When you settle debts with your creditors the right way, you won’t have to file bankruptcy or deal with its potentially devastating outcomes. Your debt settlement is shown on your credit history for just 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
Settling your debts with creditors is a practical solution especially if you have valid explanation for not paying back your debts. After you and your creditors have agreed on a settlement, you walk into debt freedom in a lesser time and cheaper than possible if you had attempted to repay following the original schedule.
Equally relevant, a good number of lenders are well-disposed toward settling rather than bankruptcy. There’s a high possibility that a creditor what recover as much of the amount owed as would be possible with debt settling, no matter if this is a Chapter 13 bankruptcy scenario. In case you’re filing Chapter 7 bankruptcy, the creditors have little hope of salvaging anything. Such a scenario is never a first priority to many creditors, so if it’s possible to settle this differently, they’ll listen to offers.
When your debt settlement plan is great, you may clear the amount owed within 2-4 years. In other words, you can get your finances in order earlier, minus the obligation of monthly or other regular payments.
Settling your debts could be the trigger of your financial liberty. You only need to approach your creditors and negotiate terms that suit your current financial position and goals.