Benefits of Debt Settlement
Debt settlement is when your creditors accept a lower lump-sum payment as satisfaction for your debt. Once you make the settlement payment, the rest of the balance is cancelled and you no longer have to deal with that particular debt. If your considering debt settlement, here’s what you have to look forward to.
Lower total payment on your debt.
The idea behind debt settlement is to pay 40% to 60% of your balance. Creditors agree to debt settlement offers and sometimes extend their own settlement offers because they’re afraid they may not get any money at all on the debt. Debt settlement is beneficial because it lets you get a large part of your debt cancelled.
Immediate relief from payments.
If you’re struggling with your debt payments right now, you can receive some relief from those payments as soon as you decide you’re going to settle your debts. Note that it’s not your creditors who give you relief, rather your conscious decision to let your debts fall behind so you can reach a settlement once you save up enough money. Choosing debt settlement gives you some breathing room, but it’s important that you start saving for settlement as soon as you decide you’re going to settle your debts.
Pay off your debts sooner.
If you have access to enough money, e.g. a home equity loan or line of credit, you can settle your debts in as little as six months. When you have enough cash available, you can make a settlement as soon as the accounts are ready, that’s usually when they’re at least 90 past due, but sometimes 120 days past due. Even if you don’t have home equity, you can start setting aside every month to put toward settlements. If you’re faithful with the savings plan, you can settle your debts in two to three years.
Avoid bankruptcy.
Many people who choose debt settlement are facing a Chapter 13 bankruptcy, which would require them to repay debts over a three to five year repayment plan. They don’t qualify for Chapter 7 bankruptcy which would allow them to have their debts cancelled or they want to avoid Chapter 7 bankruptcy because it would require them to give up certain assets. If you can settle your debts instead of filing bankruptcy, then you avoid having a bankruptcy on your credit report and public record.
Debt settlement isn’t as bad as it’s often made to seem. However, there are some bad debt settlement companies out there. If you decide to settle your debts, take time to choose a reputable debt settlement company or settle debts on your own.
Related posts:
- Debt Settlement Fact and Fiction
- Comparing Debt Settlement to Other Debt Solutions
- The Downside to Debt Settlement
- Two Types of Bankruptcy for Personal Debt
- Starting a DIY Debt Settlement Program
- How To Settle Your Debt
- Debt Settlement DIY vs. Debt Settlement Services
- How to Choose a Debt Settlement Company
- Alternatives to Filing Bankruptcy
- Bankruptcy Can Be Beneficial
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Debt is slavery, and the goal of this website is to help you get debt free.
If you want to get out of debt, but aren't sure what your plan should be, then click here and read the debt consolidation plan.
If you're serious about getting debt free, sign up for the free debt course that will help you lower your minimum payments, lower your interest rates, and get out of debt faster.
Get the course here:
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