Are you struggling with overdue debt and wondering whether debt settlement is a good idea to handle your situation? Some debt relief company reviews reveal that debt settlement companies can be expensive and risky alternatives.
However, the truth about debt settlement is that it comes with lots of benefits. For example, going through the Freedom Debt Relief client reviews will help you realize that a first-class debt settlement company can help you repay your debt faster, thus relieving you from unbearable loans or debts.
There is also the benefit of avoiding bankruptcy, avoiding being sued for your overdue debt, etc. With that said, continue reading this insightful piece to answer all your debt relief questions and make an informed decision regarding the best way to relieve your debt.
How Does it Work?
Generally, a debt settlement company takes care of debt settlement affairs. Here the approach is entirely different from doing it yourself (DIY). Hiring a debt settlement firm begins with thorough research on debt settlement firms. Ensure you find a genuine, reputable, licensed debt settlement company. You can leverage the debt relief company reviews available online.
The subsequent steps involve paying a certain agreed amount of money at one time to a creditor with one condition. The condition is that the creditor will forgive a section of your debt. A debt settlement company does all these negotiations on your behalf. In most cases, negotiating a debt settlement plan successfully requires the borrower to halt their minimum monthly payments. This action leads to the debt incurring higher interest and late fees, thus negatively impacting their credit score.
Is Debt Settlement Worth the Risks?
The short answer to this question is both yes and no. Based on your current financial state, the debt settlement style can either work for you or not work for you. It is essential to note that it is difficult for the debt settlement approach to end your short-term or long-term financial burdens.
However, there is no doubt that the approach will relieve you from the constant irritation of debt collectors’ calls once the parties involved reach an agreement. You also stand the chance of benefiting financially because the debt settlement firm helps you avoid bankruptcy by lowering your debt amount.
What are the Vital Questions to Ask Debt Settlement Firms?
Everybody wants to overcome the challenges and burdens of being in debt. And that’s typically what all legitimate and licensed debt settlement companies are about. Therefore, even as you is a list of some of the most important questions to ask the debt settlement company of your choice;
- Does your company have before-settlement charges?
- Is your company an attorney-based debt settlement firm?
- Who will your company assign to work on my case?
- How long has your debt settlement firm been in this business?
- How much debt has your firm settled since it began operation?
- How do I know you are an honest and licensed debt settlement firm?
What are the Pros of Debt Settlement?
The following are the advantages of employing the debt settlement tactic;
- Faster debt repayment
- Relief from unbearable debt or loan
- Avoiding bankruptcy
- You won’t be sued for your overdue debt
- It prevents your debt from being charged-off or sent to collections
- Relief from everyday calls from debt collectors
What are the Cons of Debt Settlement?
It will also help to be aware of the following shortcomings of debt settlement;
- High debt settlement fees
- Holding funds
- Negative impact on credit score
- Tax implications
- Ending up with more debt is a possibility
- Your creditor could disagree with your debt negotiation plan
From the questions and answers above, it is clear that the debt settlement approach completely differs from the DIY approach. The truth about debt settlement is that you must hire a debt settlement company that can typically renegotiate or settle your overdue debt or loan. Additionally, a debt settlement firm can help you alter the terms of your debt.
But it is also essential to consider the high debt settlement fees, tax implications, impact on credit score, and other downsides that come with debt settlement. The good news is that online debt relief company reviews can help you learn more about whether debt settlement is the right way to ensure you don’t become a loan defaulter.