Why Certain People May Prefer Debt Settlement
With debt settlement, an arrangement is negotiated between a debtor and their creditor, where the debtor repays a fraction of the amount owed as full satisfaction for their 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. While your bankruptcy entry is removed from your credit report after 10 years, most applications for work or credit will require you state if you ever applied for bankruptcy. If you lie, and the lender finds out you were once bankrupt, you may be accused of fraud. 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. Your debt settlement is shown on your credit history for just 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.
Break From Too Much Debt
When your inability to repay the money you owe creditors is genuine, you’ll find debt settlement to be relieving. Once the settlement is paid as negotiated with your creditors, you become free of debt within a shorter duration and at lower costs compared to trying to pay off as per the initially agreed plan.
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. But any bankruptcy filing under Chapter 7 diminishes the likelihood of creditors recouping something. 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.
Settling your debts could be the trigger of your financial liberty. You only need to approach your creditors and negotiate terms that suit your current financial position and goals.