Pro Debt Reduction - Debt Settlement

Debt Settlement

Is debt settlement the be all, end all of debt management programs? We'd say there are better ones, but you might disagree.

The Pros and Cons of Debt Settlement

There are a lot of reasons why consumers might see debt settlement as a desirable way to eliminate credit card debts. First of all, you get 60-80% shaved off your credit card debt. Who wouldn't want that? And second of all, since you have to pay the new, lower amounts off immediately, it's the fastest way to get out of debt (assuming you have that kind of money available). Those are definitely the biggest plusses about debt settlement. But there are definitely cons to it too.

Generally, your debt settlement agent asks you how much money you have saved up before the process begins. Let's say you owe $10,000 in credit card debt and you have $3,000 in a savings account. Your debt settlement agent will try to get your debt reduced to the amount you have available. However, some creditors will not go as low as you hope. What if the lowest they will go is $4,000? You can pay $3,000 of it, but then you still owe $1,000. In that case, some debt settlement companies can get your creditors to give you anywhere from 1-3 years to pay that remaining $1,000 off. But then you're not out of debt as soon as you had hoped you would be.

The biggest negative aspect of enlisting the aid of a debt settlement company is that your creditors will report your participation in the plan to the three credit reporting agencies. This means it will appear on your credit report and effect it in much the same way as a late payment would. Sure, that's not as bad as non-payment, but it's not good either. If you want to get debt help that doesn't effect your credit, consider one of the other debt management programs like debt consolidation, debt consolidation loans or a debt consolidation mortgage.

So, how will you manage your debt? Will you manage it at all? If you simply cannot go ahead any longer on your own, then enlist the help of one of the debt settlement programs. There are so many ways that average consumers can be helped out of debt these days that it would be foolish of us not to take full advantage of the resources that are right here in front of us in the form of credit card debt settlement and consolidation.

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