Debt settlement, as the name suggests, is a simple yet intuitive debt repayment strategy. It lets you negotiate with your creditors to accept a partial payment as full satisfaction for the debt. If your creditor ends up agreeing to that proposal/plan, you’ll just have to pay a percentage of your outstanding balance, and the rest of the debt will be canceled.
It may seem complex, but debt settlement services are a godsend and will most likely make your lives a lot easier. Though these services are extremely useful, they are rarely recommended as viable options to deal with debts. Why’s that, you may ask? Well, much of that has to do with the number of debt settlement scams in the market and misinformation among the consumers.
Now, to make you more certain about these services, here are some benefits that you should look into:
Can help you get relief from debts
You must realize that debt settlement isn’t about getting over your creditors by paying them a portion of the debt. With that being, it’d be unwise and foolish to rack up a large number of credit cards while expecting to settle it all.
These services come in handy if you are in desperate need to pay back what you owe. Once you’ve negotiated and paid your settlement, you’re basically debt-free in less time, and that too at a lower cost compared to what you would’ve paid with a typical repayment schedule.
Can help you avoid bankruptcy
One of the main reasons why people prefer to get their hands on debt settlement programs is to avoid bankruptcy. You may not realize it, but the tag of bankruptcy follows you for the rest of your life. Settling debt in a proper way can help you avoid the speed bump that is bankruptcy.
While bankruptcy entry remains on your records for ten years, debt settlement, on the other hand, only stays for 7. There’s no public record of you settling your debts. So, once the credit reporting time runs out on your settled accounts, you won’t have to deal with the settlement anymore.
Can help you repay debts in less time
It is recommended that you choose good and result-driven debt settlement programs because only then you’ll be able to repay your debts in two to four years. This is much less time compared to what you would’ve spent paying your debts normally.
You’d be surprised to know that debt consolidation and credit counseling have repayment periods that range from 3 to 5 years. With that being said, it’d be justified to say that it might take decades for you to pay off a debt if you stuck to the original repayment schedule.
How Does Debt Settlement Works?
Debt settlement companies like America DR often refer to themselves as debt relief and debt adjusting companies. These companies are all about offering to contact your creditors on your behalf, so they can negotiate a better payment plan or settle or reduce your debt. They charge a fee that often is a percentage of the amount you’d save on settled debt.
These companies try to negotiate with your creditor for a lump-sum payment that’s less than the amount you owe. They may also require you to make regular deposits into an account that’s under your control but is administered by some third party. They may also ask you to stop paying your creditors until a debt settlement agreement is reached.
Once the company and your creditors reach an agreement, you must agree and make at least one payment to the debt collector/creditor for the settled amount.
If you are facing a real struggle paying those overwhelming debts, then debt settlement services should be on your hit list. These services are designed to help you repay debts without any complications whatsoever.