Debt settlement may sound good to you since you don’t need to pay for the full amount of the loan but is it really for your benefit? A debt settlement means that people you owe money from can’t bother you anymore once you settle and they can’t take you to the court about your debt as well. Before you call a debt settlement Attorney or shop for debt settlement companies, be aware that settling your debt may be counterproductive for you.
Debt settlement 101
When talking about debt settlement, it simply means that your creditor has agreed to ask you for repayment that is less than the amount you owe in total. But think about these negative implications of settling your debt.
It is not that easy and fast to get a debt settlement approval. A creditor will always try to squeeze out every penny that you can give. Approval could take two to sometimes even four years. If you get to be approved, chances are, your credit standing will not look good. If you contact a debt settlement company, there will be fees that you need to shell out from your pocket and it may cost you a small fortune as well. Usually, settling credit card debts are the most common way of debt settlement.
Debt settlement options?
Debts that have been forgiven doesn’t mean that it is totally down to zero. The Internal Revenue Service (IRS) can still tax your forgiven debts. Be aware of the obligations you need to fulfill when you try to settle your debt.
An alternative to debt settlement would be to file for bankruptcy. This is sometimes overlooked but this can be favorable for a debtor because you can immediately have your debts erased and you can start anew immediately. Filing for bankruptcy may ruin your credit history for some time but it could be a better alternative than debt settlement.
If you believe that settling your debt is the best option given your circumstances, check out companies that offer settlement services. Try to veer away from companies that will ask you money and check out their reputation as well.
Joseph Aldeguer is a nationally acclaimed Chicago-based businessman having experience of more than 25 years in the field of real estate and financial sector.