You may have heard of debt settlement and wondered if it is a good idea for you. It is a practical option for those who are in over their head in debt. It allows you to offload a part of your debt via settlement, for good.
In 2018 the American household debt hit a record high of $13.21 trillion. It’s a substantial amount, but about 300 million people shared this number. That said, some people manage to get knee-deep into debt without realizing it. If you find yourself in such a situation, then you should consider debt settlement. These are some of the benefits from it:
Save Yourself from Bankruptcy
Bankruptcy is widespread, but you should still avoid it. It hits your credit and makes it almost impossible to get decent credit in the future. When you reach a position when you cannot pay your debt, then it is better to negotiate a settlement of debt rather than file for bankruptcy.
Bankruptcy will haunt for the rest of your life and will remain on your credit report for a good ten years. When you choose to settle instead, you can save yourself the hassle of dealing with the consequences of bankruptcy.
Cut Your Balances By 50% to 70%
A large chunk of the amount you owe goes in interest and charges. When you begin settlement negotiations, with a little skill, you can get a break from paying all those interests and fees. You have to repay only the principal.
Companies deal with this by beginning negotiations at 30% of the balance you owe and working their way up. An expert negotiator can help cut your balances by more than half.
Repay Your Debt in Lesser Time
When your debt is reduced, it will take you less time to repay your debt. Once your settlement process begins, you will not have to make payments until a settlement amount is reached. Most settlement companies will work in your favor and charge a small fee to negotiate on your behalf.
Become Debt Free
With the burden of your debt reduced, you can work towards reaching financial freedom. It is not only being debt-free but also not falling into the trap again. It will help if you make sure that your earnings cover your expenses each month.
It’s Better than Debt Consolidation
Debt consolidation is when a certain amount of interest is reduced from your balance. Nevertheless, it still leaves you with a large chunk of balance to repay yourself. Debt settlement reduces a significant portion of your balance. It results in lowering your monthly payments and the number of payments you need to make.
It’s Better than Debt Management
Debt management is when your debt, except shopping expenses, is settled by way of negotiation. Depending on how much of your debt comprises shopping expenses, it may or may not be a suitable option.
Debt is a trap that can bind you down and not allow you to achieve financial freedom. A debt settlement agency can reduce the burden of your debt. You can soon be on your way to becoming financially stable.