Why Certain People May Prefer Debt Settlement
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. This option can work for you depending on the nature of your financial distress.
Below are examples of merits of debt settlement to overwhelmed debt consumers:
You May be Safe From Bankruptcy
Circumventing bankruptcy may compel people to settle their debts. Bankruptcy is capable of solving your financial woes depending on your situation, but it forms an indelible dot for as long as you live. Your credit report will have the bankruptcy filing for 10 years, but many of the times you apply for a loan or job, you may be asked whether you ever filed for bankruptcy. 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.
If executed well, debt settlement is a reliable way for evading bankruptcy or having to face its consequences, which can be dire. After seven years, your credit report will stop revealing your debt settlement. 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.
Relief From Excessive Debt
Settling your debts with creditors is a practical solution especially if you have valid explanation for not paying back your debts. The moment you’ve successfully negotiated and paid the settlement to creditors, it’s taken a relatively shorter time and smaller cost to achieve debt freedom than paying off as required under the original loan contract.
Another issue is that there many creditors who will prefer this approach to bankruptcy. In a lot of scenarios, creditors won’t squeeze a lot from you, including under a Chapter 13 bankruptcy filing, unlike what settling can offer them. 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.
It’s possible to settle your debt obligations in two to four years if you’re on a well-structured debt settlement program. In other words, you can get your finances in order earlier, minus the obligation of monthly or other regular payments.
You may legally walk away from your debts by settling. Engage your creditors with a view to settling in a way that resolves your financial circumstances today and tomorrow.