Why Debt Settlement Makes Sense in Specific Cases
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. As long as the creditor is satisfied, you only repay a percentage of what’s owed, with the rest of the debt being offset entirely. Many debtors find this approach advantageous in many ways depending on their specific financial circumstances.
Let’s take a look at some advantages of debt settlement to debtors in financial trouble:
Bankruptcy May be Avoided
You may prefer debt settlements with a view to avoiding bankruptcy. 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 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. If your response is no, but the bank discovers later that you did file bankruptcy, charges of fraud may follow you. Likewise, your job is not secure if you’re caught lying.
When you settle debts with your creditors the right way, you won’t have to file bankruptcy or deal with its potentially devastating outcomes. After seven years, your credit report will stop revealing your debt settlement. Likewise, your debt settling won’t in public files, and the matter becomes water under the bridge when the time limit for credit reporting on the accounts in question runs out.
Reprieve From Overwhelming Debt
If you have a legitimate reason for not being able to repay what you owe, then debt settlement is a viable way out. Once the settlement is paid as negotiated with your creditors, you become free of debt within a shorter duration and at lower costs compared to trying to pay off as per the initially agreed plan.
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. But any bankruptcy filing under Chapter 7 diminishes the likelihood of creditors recouping something. 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. The major implications to you are the quicker restoration of financial stability, leaving behind the overwhelming regular debt repayments sooner.
Debt settlement may be your legitimate key to financial freedom sooner. Engage your creditors with a view to settling in a way that resolves your financial circumstances today and tomorrow.