Debt Settlement - What Are the Advantages and Disadvantages of Debt Settlement?
Let us begin with the advantages of debt settlement.
-Reduction in debt.
If you opt for debt settlements, you can bring down the amount owed to your creditors by as much as 70% in a single day.
Your debt shell come down without a payment of even a single cent on the day you sign the settlement agreement with your lender.
-Easy repayment facilities The amount to be repaid after the waiver can be paid in installments.
Settlement companies can easily secure an installment up to two years.
Take a look at the amount owed to all your unsecured lenders.
Calculate thirty percent of the amount owed and spread it over two years.
Needless to say, you will be left with lots of cash in your hand after settlement.
-Complete protection of privacy.
Unlike bankruptcy, you do not have to undergo the ignominy of watching your private financial matters becoming public.
Declaration of bankruptcy cannot be done in a private way.
On the other hand, settlement of debt can be done quietly by employing a professional company.
There is no need for your colleagues, friends or relatives to find out that you have settled your debt.
-Minimum formalities Unlike debt consolidation, there are very few formalities involved in settlement.
All it takes is a letter from your lender and your debt problems will come to an end.
On the other hand, debt consolidation involves processing charges, detailed paper work and protracted negotiations with each and every lender.
The disadvantages of debt settlement are -Your credit score will take a hit because lenders will report that you have settled your debt instead of repaying it in full.
While its impact is not as bad as bankruptcy, it certainly will hurt you hard if you have a high credit score.
-There are numerous fraudulent companies that cheat innocent and gullible borrowers of their hard earned money.
Of course, this is not a disadvantage of debt settlement per se.
However, until the industry is regulated in a sensible and pro consumer manner, this continues to be the primary reason why people are wary of dealing with settlement companies.
-Reduction in debt.
If you opt for debt settlements, you can bring down the amount owed to your creditors by as much as 70% in a single day.
Your debt shell come down without a payment of even a single cent on the day you sign the settlement agreement with your lender.
-Easy repayment facilities The amount to be repaid after the waiver can be paid in installments.
Settlement companies can easily secure an installment up to two years.
Take a look at the amount owed to all your unsecured lenders.
Calculate thirty percent of the amount owed and spread it over two years.
Needless to say, you will be left with lots of cash in your hand after settlement.
-Complete protection of privacy.
Unlike bankruptcy, you do not have to undergo the ignominy of watching your private financial matters becoming public.
Declaration of bankruptcy cannot be done in a private way.
On the other hand, settlement of debt can be done quietly by employing a professional company.
There is no need for your colleagues, friends or relatives to find out that you have settled your debt.
-Minimum formalities Unlike debt consolidation, there are very few formalities involved in settlement.
All it takes is a letter from your lender and your debt problems will come to an end.
On the other hand, debt consolidation involves processing charges, detailed paper work and protracted negotiations with each and every lender.
The disadvantages of debt settlement are -Your credit score will take a hit because lenders will report that you have settled your debt instead of repaying it in full.
While its impact is not as bad as bankruptcy, it certainly will hurt you hard if you have a high credit score.
-There are numerous fraudulent companies that cheat innocent and gullible borrowers of their hard earned money.
Of course, this is not a disadvantage of debt settlement per se.
However, until the industry is regulated in a sensible and pro consumer manner, this continues to be the primary reason why people are wary of dealing with settlement companies.
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