Why Debt Settlement Makes Sense in Specific Cases
Debt settlement is a kind of plan where a debtor negotiates with their creditor to agree to a partial payment as total fulfillment of the debtor’s obligation. If a settlement is reached, you only pay a fraction of the outstanding balance, with the remainder being revoked for good. This strategy has many benefits based on the kind of financial situation a debtor is experiencing.
Here are some benefits debt settlement can provide to debtors in distress:
You May be Safe From Bankruptcy
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. You may be considered guilty of fraud for denying that you once filed bankruptcy after your lender proves otherwise at some point. Likewise, your job is not secure if you’re caught lying.
If executed well, debt settlement is a reliable way for evading bankruptcy or having to face its consequences, which can be dire. Debt settlement features on a consumer’s credit record for only seven years. Again, public records will not show you settling any debts anywhere, and after the credit report time limit for your settled accounts has elapsed, this issue is forgotten forever.
Relief From Excessive Debt
If you have a legitimate reason for not being able to repay what you owe, then debt settlement is a viable way out. 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.
At the same time, many lenders won’t mind this strategy as opposed to 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. The majority of such creditors will want to avoid this in case there’s a more viable way out, so they may accept your offer.
With a proper debt settlement arrangement, you can become debt-free in 4 or even 2 years. That means you’re able to start reorganizing your finances sooner without the burden of paying out any amounts on a pre-agreed schedule.
You may legally walk away from your debts by settling. You only need to approach your creditors and negotiate terms that suit your current financial position and goals.