You may have seen those advertisements that have promised to settle your debt for only 30% to 50% of what you owe. If you have been a bit cautious about this, you will be happy to learn that debt settlement is a legal and real solution to debt. If you have qualified for a debt settlement program, then it can be one of the best ways to save you money and get you out of debt. It also keeps you from having to file bankruptcy or consumer proposal which can really hurt your credit.
Debt Settlement Basics
The overall concept of debt settlement isn’t hard to understand. Basically, you hire a debt settlement company to negotiate with creditors. During this negotiation, a good company will be able to get your debt paid in full for a lot less than what you originally owed. This helps to save you money and it makes paying down your debts so much easier.
Once you have enrolled into a great debt settlement program, you will stop paying creditors and start to save in a debt settlement fun. This creates a lump fund which will be handed to your creditors when they approve the debt settlement. Once the settlement has been agreed upon, and the funds have been handed over, your debt will be marked as paid.
Debt settlement is a great way to save money. Creditors can settle for less than $0.40 per dollar. This can turn your $11,000 debt into a $5,000 debt.
Debt Settlement vs Other Options
You may already know that debt settlement is the only choice out there when you need debt relief. There are a bunch of options, so be sure to weigh out the pros and cons of these relief programs with a debt settlement.
There are several debt relief options that can do damage to your credit history. Consumer report and personal bankruptcy will stay on your credit report for 7 years, which can cause you to not be able to qualify for new loans.
Debt settlement was designed for those who have a reasonable expectation to get out of debt within a normal time frame of most settlement programs. If you don’t have a reasonable chance for saving up a lump sum payment in three years, you may be better off with something else like debt consolidation loans.
Debt settlement is often best if your debts exceed $10,000. It will be best to go for debt consolidation or credit counseling if you owe under $10,000.
Know for Sure before Hiring a Debt Settlement Company
Debt settlement can help you to get out of debt quicker than expected. If you have a large amount of debt, but don’t want to file for a consumer proposal or bankruptcy, then fill out this form to see what your options are.
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