Cost is one of the biggest concerns that people have about debt relief. This is expected and if you already have a large amount of debt than you know that adding any other costs to get debt relief can be pretty scary, even if it means that you are going to start seeing results when it comes to repaying your debt.
There are a few ways that you can look at the costs of debt relief like debt settlements. Before even starting on this road, you need to know that there isn’t a thing as debt relief that does not have any consequences. It doesn’t matter if you are looking for consumer proposal, debt consolidation or another solution, there will be a price that has to be paid. However, some options will be cheaper than others. Debt settlement programs are often cheaper in the long run than bankruptcy or consumer proposals, which is why a lot of people who have a bunch of debt often choose to use a settlement option to make things right with the creditors.
Costs of Not Entering into Debt Settlement
There are just 2 ways that you can look at the costs of debt settlement. The first being that the cost that comes with entering into debt settlement will only happen when you don’t do anything about the debt, or you decide to select another option for debt relief. The costs can be pretty large if you do nothing.
Emotional costs: When you owe large amounts of money can be hard on your emotional health and the calls from any debt collectors can really make things worse. The cost can be ever more when you take your time to select going through with debt settlement or you get forced into consumer proposal which a creditor can decline and it end up hurting your credit score, and that would leave bankruptcy as the only option that there is.
Interest and Late fees: The interest charges and late fees can cause you to delay in picking a debt relief option. It is these fees that will be added to your principal, which means that you will have interest collecting to your main amount. This is what increases your debt balance and it means that you will have to pay much more to settle your debt if you decide to pick debt settlement.
New Debt High Interest Rates: High unpaid debts and late payments can make you a poor credit risk for any new creditors. If you leave a debt unsettled, then you will end up paying much higher interest rates on new loans.
Costs of Picking Debt Settlement
It doesn’t matter how it gets negotiated, there will be costs that come with debt settlement. Although, these costs are not much compared to costs of doing nothing or picking a riskier relief option.
Program fees: Debt settlement plans will often have some fees with it and they are based on how much debt will need to be settled, where you live and how much time you are going to be enrolled in the program.
Normally you will save money when compared to credit counseling because even though credit counseling can lower your interest rates, your principal amount will stay the same. This means you end up paying more to remove the debts than if you would have settled for less than what you owe. You will often pay less in debt settlement fees than you would if you had your interest rate lowered with credit counseling. Settlement is even cheaper than bankruptcy because you don’t have to surrender assets, even with exemptions, you will have to surrender a lot of what you have gathered when you file bankruptcy.
Credit Score Problems: One issue that comes with debt settlement is the cost of your credit score. It isn’t as harmful as going through and filing for bankruptcy or consumer proposal. A decent debt settlement company will be able to negotiate with your creditors and push them to write off unpaid parts of your debt in way that will not as harmful to the credit score you have.
Learn more about debt relief
The only way for you to have a full understanding of what the costs of debt settlement are is to have a free consultation on all of the debt options that you may qualify for. Just fill out the debt relief form below.
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