No one wants to be in debt. But it can also be dangerous to rush into an agreement with a debt relief company if you haven’t done your research. Many of these organizations are not as honest, or as helpful as they appear. If you’re wondering if debt settlement is a good idea, here are a few answers for you.
Have You Considered Other Options?
In the wide world of ways to get out of debt, settlement is one of the more extreme measures consumers can take to help themselves. This isn’t necessarily a good or bad thing; it’s just the fact of the matter. Due to this, it’s usually best to consider other options before deciding debt settlement is your best course of action.
Pretty much everyone should start their journey out of debt by speaking with a credit counseling service. This assistance is offered to people who are struggling to get out of debt, or even stay afloat. A credit counselor can help in a variety of ways, from simply offering educational materials and budgeting advice, to actually putting together a debt management plan (DMP). Credit counseling is sort of a way for you to dip your toes into the debt relief arena to get a better idea of how much help you’re really going to need in order to pay off your loans.
Debt consolidation is a common method people use to get out of debt. This is typically good to consider if you really believe you’re going to be able to pay off your loans with just a little bit of extra help. Basically, you’re taking various unsecured debts and rolling them into a single new loan at a lower interest rate or monthly payment.
While both of these options will work for many individuals, not everyone is going to be able to get out of debt this way. Often, debt settlement becomes one of the only viable paths for people looking to beat their debt.
Do You Understand The Pros And Cons Of Debt Settlement?
Essentially, you’ll work with a debt relief agency that specializes in settlements to negotiate single payments in full of outstanding balances with your lenders. This works by sending money that you would normally pay to your creditors to the debt relief company, which holds it in an escrow-like account for you. They then use this money as a bargaining chip to get a settlement deal on your debt. The benefit to debt settlement is it can help individuals who are way over their heads in debt actually get out of some of it. But there are some drawbacks as well. For starters, the debt settlement process will ding your credit in the near term, as you’re not paying your bills. While this is often still better in the long run if you can get out from the grip of overwhelming debt, it’s important to expect this as part of the activity.
Have You Found A Trustworthy Debt Relief Company?
Working with the right company is one of the most important parts of the debt settlement process. You wouldn’t want someone performing surgery on you if they’re just pretending to be a doctor. While the stakes might not be quite as high when it comes to your finances, it’s crucial you avoid scams when embarking on the process of debt settlement. There’s no shortage of people out there looking to take advantage of those with financial troubles.
There are well respected companies in the debt relief realm. For instance, consumer reviews on Freedom Debt Relief show they’re one of the most reliable names out there. In fact, they recently made the top of the US News list of the best debt settlement companies. They also have positive feedback from over 3,000 people with Consumer Affairs within the past year alone.
Debt settlement can be a good idea if you understand the risks and rewards, and are willing to take your time finding the right company to work with you. Once you have a plan to settle your debt, you will feel a huge weight lifted off your shoulders and your future finances will flourish. When you do all these things mentioned above, debt settlement is a valid way for you to beat your debt.