Debt settlement is the best option for someone, who cannot pay the full amount to the lending company. However, before making any decision, it is important to learn whether it is the right option for you. Even, some debt settlement companies cannot give you the best outcome. Hence, you should get legal advice if you want to lead a debt-free life. It is always good to consult a lawyer, who has enough experience and expertise in dealing with such cases. You should know what the benefits and drawbacks of debt settlement are.
Merits of debt settlement
First, your lending company should be willing to settle the loan and both of you must agree on the same terms and conditions. Some of the benefits of the debt settlement are:
Relief from financial burden quickly
You might get frustrated to know that you have a huge amount to pay. However, with debt settlement as an option, you can get rid of this burden permanently. If you have a lump sum debt settlement agreement with your creditor, you can easily remain a debt-free life ahead of you.
Getting rid of collectors calling you again and again
The lending company will send alerts to the collection agencies not to bother you for repayments. You can get rid of their irritating calls and knocking at the door. This way, you will be able to live a stress-free life and can focus on other important tasks instead of looking for ways to avoid them.
Avoiding bankruptcy
You will not need to file for bankruptcy if you have opted for debt settlement. A settled status may be reflected on your report for about seven years while a bankrupt status will stay with you for a longer period. Moreover, you may not apply for loans, credit cards and other financial supports for many more years to come. That’s why, debt settlement can be the best way to deal with your financial condition.
Disadvantages of debt settlement
It is highly recommended to consider the cons of debt settlement. Some of them are:
Negative impact on your credit scores
Your credit scores will adversely get affected if you settle your debt. It will be reflected for about seven years and you cannot get any financial support.
Late fees on stopping payment
If you did not pay the lending company, they will accumulate fees and other charges, which will make you end up more money.
You must decide after carefully assessing your options.