What is Debt Settlement?
You have probably got a glimpsed of promotions offering to settle your debts for a much affordable amount than what you owe from your creditors. If you are somehow in doubt about this offer, you can feel confident with debt settlement. This is because debt settlement is a legal and legitimate way for you to solve your mound of debts. Moreover, if you get accepted to a known settlement program, it can be a great chance for you to save money. It can be a means for you in avoiding consumer proposal or bankruptcy, which are both drastic in hurting your credit.
The Basics of Debt Settlement
The primary focus of debt settlement is not complicated to comprehend. Basically, you need to reach out to a debt settlement company that will act on your behalf in negotiating with your creditors. A good company will make your creditors pay your debt in full, which can save you more money and make your repayments easier.
After enrolling for a debt settlement program, you will no longer be paying to your creditors. Instead, you will start accumulating funds for your debt settlement. By means of accumulating funds, you can build a lump sum that will be compensated to your creditors at the time when your settlement gets approved. Once the settlement agreement is signed, the accumulated funds will be dispensed to settle your debts paid in full.
Moreover, debt settlement is a great opportunity for you to save funds. Your creditors may agree to the settlement for about forty cents for every dollar or lesser. This way, if your debt totals $10,000, you can reduce it to $4,000.
Debt Settlement Compared to Other Debt Relief Options
Debt settlement is not just your choice in eliminating your debt. There are several options available for you to choose from. In Canada, several debt relief options can aid residents who are struggling in paying their debts. Having debt settlement as the most common debt relief approach, it is significant to compare it to the other options available.
Impact on Your Credit
Many of the debt relief options can greatly impact your credit. Two of the most perceived impact is in bankruptcy and a consumer proposal. In fact, personal bankruptcy can damage your report for seven years, making it hard for you to get new credit or installment loans in the future.
Your Situation
Debt settlement is designed for individuals who can come up with funds that can be used as a lump sum to compensate creditors within the span of 3 years or less. It is designed for those who can reasonably comply with the program in terms of the allotted timeline. If you don’t have the capacity as such, debt consolidation is much best for you.
Amount of Debt
Debt settlement is a choice for someone who’s debt is beyond $10,000. If you owe less than this amount, a credit counselling and debt consolidation is a more favorable option for you in the long run.
Be Sure Before You Hire a Debt Settlement Company
Getting out of debt without the help of a debt settlement company may not be possible. It is a must that you reach out to a debt settlement company for you to get the best option. If your consumer debt is too much to bear, and you want to avoid filing for bankruptcy, simply fill out the debt relief form to get the help that you need.
