What is debt settlement?
Debt settlement, sometimes referred to as a debt relief plan, involves working with a creditor to settle your debt. In most cases, debt settlement sees the debtor pay less than they owe, typically a lump-sum payment.
Pros of debt settlement
The greatest benefit of debt settlement is that it usually allows you to pay your creditors less than you owe them. Additionally, this process allows you to pay off your debt quicker, which helps you get back on your feet sooner.
It’s also worth noting that reaching a debt settlement agreement ends the debt collection calls. Finally, avoiding bankruptcy makes debt settlement incredibly alluring to many people.
Cons of debt settlement
While it may seem like debt settlement is a no-brainer, it’s important to note that some creditors simply aren’t willing to negotiate. They may want the total amount you owe and refuse to back down. Additionally, debt settlement often incurs fees, which makes things difficult for people struggling with debt. Finally, even though debt settlement takes your debts from your record, it may have a negative impact on your credit score.
If you aren’t sure about debt settlement, you have other options. Debt consolidation loans, balance transfer credit cards, and bankruptcy provide alternatives for people who don’t want to deal with debt settlement.