The Advantages and Disadvantages of the Debt Settlement Program
Debt settlement programs are very beneficial to those who are behind on their debt or no longer able to pay their minimum payments. Many consumers opt to do bankruptcy without first doing an investigation on the benefits of the debt settlement program. Debt settlement should always be a consideration before any type of bankruptcy is filed. Bankruptcy is a very final step to a financial situation and may not be the only answer. It is also very public which can stop you from receiving credit, employment or rental agreements. When doing a debt settlement the consumer will be given a lowered debt balance that is agreed upon between the consumer and creditor. Once the debt is settled the consumer receives a low minimum payment on that settled amount which is much more manageable. Interest rates are gone and the consumer can pay more when they can to get the debts paid off sooner. Creditors do take into consideration that the borrower is making an effort to pay off the debt that was originally owed.
Some consumers are weary when it comes to the debt settlement program due to the temporary mark that it leaves on their credit score. This is one of the disadvantages to the debt settlement, but for a short time. A bankruptcy is on ones credit score for at least seven to ten years. Settlement id done in a fraction of the time and the consumer can restore their credit once the debts are paid. Keep in mind the creditors like the fact that the consumer is making an effort to pay back some of the debts rather than doing a bankruptcy all together. Most of the disadvantages in the debt settlement program are temporary and may be worth it in order to be debt free. Another stipulation that consumers have when it comes to debt settlement is that only unsecured debts can be entered into the program. The debts cannot be tied to any assets such as a home, car or any type of property. Secured debts are more serious and if all possible should be kept current. If one defaults on these debts they can lose the properties that are tied to them. Debt settlement can only help with unsecured debt such as, credit cards; collection accounts some personal loans as long as they are not secured. As always, when considering debt relief it's always advised to consider consumer credit counseling services first before any program that would work to adjust the overal balance.