Debt settlement is when a company works on your behalf to negotiate a lower amount than what you owe to your creditors. Most of the time, a good settlement company can get the total amount you owe cut by about half, or even less. Most people who are having money problems really need a break like that.
More than ever, people who are in debt need a break from it. Most people file for bankruptcy or try to settle their debts. Most people already know that bankruptcy is the last thing you want to do, leaving debt settlement as the only other option.
The question is whether or not debt settlement really works.
Settlement, which is sometimes called "debt negotiation," works for sure. The more important question is whether or not it's right for you. Before we decide if it's right for you or not, let's make sure you understand how it works.
The number of people who use debt settlement to get out of debt has grown a lot in recent years. Since the bankruptcy laws changed in 2005, making it much harder for people to use that option, this has become more and more true.
For example, if you're having trouble paying off your debts, you're probably getting a lot of calls from creditors. Debt settlement companies will also take care of most of this for you by dealing with your creditors. Also, if you owe $90,000 and pay about $1,500 per month, that could go down to about $90,700 per month.
So, let's look at the bad things about debt settlement to see if it's the right choice for you. We already know that it will get you out of a lot of your debt, but it also has some bad points.
Two of the problems are that the programme costs money and that it can hurt your credit report. A typical debt settlement company will charge fees that add up to 15% or more of the total debt. Most people need their help and are willing to pay for it. Keep in mind that the more they charge you, the more they should be saving you.
Your credit report will also be hurt if you settle your debts. Don't let anyone tell you otherwise: your credit will take a hit while you're in debt settlement. Chances are, if you're thinking about debt settlement or bankruptcy, your credit is already in bad shape. However, if you've managed to keep your credit in good shape so far and know you may want to buy a home in the next year, debt settlement may not be the best choice for you.
You can be as good as new in 6 to 12 months if you have a plan and are done with settlement. Debt settlement has helped hundreds of thousands of people get back on their feet. It's not a replacement for being smart and making your payments on time, but it can help you get out of debt. You just need to figure out if it's the right answer for you.
