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. This option can work for you depending on the nature of your financial distress.
Here are some benefits debt settlement can provide to debtors in distress:
Bankruptcy May be Avoided
A lot of debt consumers choose settlement as a way to evade 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. You may be considered guilty of fraud for denying that you once filed bankruptcy after your lender proves otherwise at some point. 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. 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.
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. 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.
Equally relevant, a good number of lenders are well-disposed toward settling rather than bankruptcy. In many cases, the lenders won’t get much from their debtors even if the filing is under Chapter 13 bankruptcy, compared to the prospects of settling. And if you file Chapter 7 bankruptcy, the prospects for recovering anything are small. Such a scenario is never a first priority to many creditors, so if it’s possible to settle this differently, they’ll listen to offers.
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. You only need to approach your creditors and negotiate terms that suit your current financial position and goals.