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Top 5 Reasons To Consider Debt Settlement

Responsible debtors who are in “over their heads” should look at these top 5 reasons to consider debt settlement.

What is Debt Settlement?

When a consumer accumulates an inordinate amount of debt, he may look for a way to reduce or eliminate the debt more rapidly and easily than the monthly payments allow. Credit card debt, for example, can take years to pay off, if one is only able to make minimum payments. If an emergency occurs, and a debtor is close to the maximum credit limit on cards, moreover, there are no funds available. Whatever the reasons, when debt becomes oppressive, debt settlement is an option. In this process, a consumer contacts each creditor and arranges for a lower total debt amount and, often, lower payments to pay off the lower debt agreed upon. Thus, the debtor realizes immediate relief on a monthly basis and has the opportunity to eliminate the debt altogether in a shorter amount of time. The top 5 reasons to consider debt settlement services are here listed

1. Debt Settlement Relieves Stress

Overwhelming debt places an individual and a family in emotional stress. Familial discord over financial issues is a major cause of divorce, depression, anxiety, and a variety of resultant physical ailments, which could include ulcers, high blood pressure, stomach disorders, etc. If a couple is able to take the initiative to obtain settlement, the financial strain will ease.

2. Debt Settlement Reduces and Eliminates Debt More Quickly

The purpose of debt settlement is to lower the total amount owed to a creditor. This alone allows the debtor to eliminate the debt more quickly. If lower payments are also a part of the settlement, the reduction in monthly payment is immediate and beneficial to the total family budget. Ridding oneself of cumbersome debt allows savings and money available to enjoy life.

3. Debt Settlement Can Assist One’s Credit in the Long Run

While a credit score will take an initial hit through a debt settlement, it should be remembered that, over a year or so, if the lower payments are made on time, and the debt continues to reduce, the credit score gradually climbs. Further, once over half of the total debt is paid off, a credit score can bump up as much as 40 points.

4. Debt Settlement is Preferable to Bankruptcy

Bankruptcy remains on one’s credit report for 10 years. With this on one’s record, any credit obtained will be at high interest rates, because a creditor will see the consumer as a much greater risk. Debt settlement is seen as a more responsible action on the part of a debtor.

5. Debt Settlement Means Lower Finance Charges

If a creditor and debtor agree on a lower total debt amount, the total interest paid on that debt over the life of the loan would be much less. The monthly interest charged would be less because it is being calculated on a new lower amount, and the ability to pay off the debt sooner means lower overall interest paid.

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