Havingdebtis all too common 77% of all householdscarry some amount of debt.
But even though its common, that doesnt mean its easy to deal with.
Thats why some borrowers turn to debt settlement for relief.
It can potentially slim down what you owe, help you avoid bankruptcy and make debt repayment less overwhelming.
But is debt settlement always the right choice?
Well explain what it is, how it works, the risks involved and other options.
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What Is Debt Settlement?
Debt settlement is a negotiation process that aims to reduce your total debt owed to a creditor.
In exchange, the creditor will forgive the remainder of the debt.
Once the debt is settled, the creditor cant hassle you for more money.
However, the process cantake several years, and it isnt always possible to settle the debt.
You cant settle debt acquired from a mortgage or auto loan.
Bringing in a third party often increases the chances of successful settlement but it comes at a cost.
Companies typically charge an average of1525% of the total debtowed.
If you hire a debt settlement company, theyll handle the negotiation.
The firm may have you stop paying and instead put the money into a separatesavings account.
This could negatively affect your credit score, but it also gives the company leverage to negotiate.
In 10 days,these 10 practical stepscould help you get back on the right financial track.
For example, finding a reputable debt settlement company can be difficult and costly.
It could take three or four years before you and the creditor come to an agreement.
If you want to avoid it, consider pursuing a lower-risk option.
For example, credit counseling can help you create a realistic debt management plan.
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But once you understand the risks, its not always the best option.
It can take years to negotiate and doesnt come with guaranteed success.
Its important to understand the pros and cons before you dive in.
