Why Certain People May Prefer Debt Settlement
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. If a settlement is reached, you only pay a fraction of the outstanding balance, with the remainder being revoked for good. 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:
It’s Possible to Evade Bankruptcy
Circumventing bankruptcy may compel people to settle their debts. Bankruptcy is a good option out of debt in some circumstances, but it’s a blot on your record for the remainder of your life. 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 your response is no, but the bank discovers later that you did file bankruptcy, charges of fraud may follow you. Likewise, your job is not secure if you’re caught lying.
Done right, debt settlement can effectively help circumvent bankruptcy along with its possibly unfavorable outcomes. Debt settlement features on a consumer’s credit record for only seven years. Likewise, your debt settling won’t in public files, and the matter becomes water under the bridge when the time limit for credit reporting on the accounts in question runs out.
Reprieve From Overwhelming Debt
Settling your debts with creditors is a practical solution especially if you have valid explanation for not paying back your debts. 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.
Another issue is that there many creditors who will prefer this approach to bankruptcy. In a lot of scenarios, creditors won’t squeeze a lot from you, including under a Chapter 13 bankruptcy filing, unlike what settling can offer them. And if you file Chapter 7 bankruptcy, the prospects for recovering anything are small. The majority of such creditors will want to avoid this in case there’s a more viable way out, so they may accept your offer.
It’s possible to settle your debt obligations in two to four years if you’re on a well-structured debt settlement program. That means you’re able to start reorganizing your finances sooner without the burden of paying out any amounts on a pre-agreed schedule.
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.