Why Certain People May Prefer Debt Settlement
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 option can work for you depending on the nature of your financial distress.
Let’s take a look at some advantages of debt settlement to debtors in financial trouble:
It’s Possible to Evade Bankruptcy
You may prefer debt settlements with a view to avoiding bankruptcy. Bankruptcy is a good option out of debt in some circumstances, but it’s a blot on your record for the remainder of your life. 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. And you may lose a job for lying about it.
Done right, debt settlement can effectively help circumvent bankruptcy along with its possibly unfavorable outcomes. 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
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.
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. And if you file Chapter 7 bankruptcy, the prospects for recovering anything are small. The people whom you owe money won’t let it come to this if there’s a better alternative, so they may want to settle.
With a proper debt settlement arrangement, you can become debt-free in 4 or even 2 years. In other words, you can get your finances in order earlier, minus the obligation of monthly or other regular payments.
Debt settlement may be your legitimate key to financial freedom sooner. Just reach out to your creditors and hammer a deal that corresponds to your existing financial situation and objectives.