Debt settlement is not for people simply trying to save money and not repay their debts. It is not mean for those who simply want to save money after a shopping spree. It is not a program designed to “stick it to” the big corporations either. When real hardship does not exist, creditors are not much likely to settle and much more likely to take legal action against the person simply seeking an easy exit from their financial situation.
Debt Settlement is an option best used to avoid having to go to federal court and file for bankruptcy. It is a way for those people who cannot even pay their minimum payments anymore to still get ahead. It is for those who find themselves skipping a meal to pay a credit card bill. It is for those who have accrued debts far beyond their means, often due to a substantial drop in income or unexpected medical emergency. Also it is for those who have huge bills such as those arising from an unexpected medical emergency they have no hope of being able to pay. It is for those who want to pay creditors what they can afford but simply cannot afford to pay what creditors are charging them on a monthly basis.
Consider debt settlement only after you have fully assessed your finances. Perform a full analysis of your financial affairs. Who do you owe and how much? How much are your payments vs. your income? Is it even possible for you to catch up on your bills? Do you have other ways to get the debt paid such as a loan from a relative or a home refinance? Are there lifestyle changes you can make to help you to get on top of your finances? Can you possibly improve your income to get caught up on your bills? Overall one must determine if their hardship is insurmountable on their own.
Once you have concluded that there is no way to escape your situation on your own it is necessary to look at hiring a professional to help you. The 3 primary debt relief options are consumer credit counseling and filing bankruptcy. Weigh all your options carefully before you decide on doing anything. Companies that provide these services will typically provide free consultations and free quotes for the services.
Debt settlement can be a very useful tool for those with real hardship and nowhere else to turn to resolve their financial situation.
Debt Settlement is an option for those who have few options for debt relief. Consumer Credit Counseling is an option for those with the luxury of having options.
Consumer Credit Counseling (CCC) is primarily for those seeking financial convenience. CCC reduces interest rates on credit cards whose payments are relatively current. With this service the entire outstanding debt is repaid in full. The terms of CCC are set up by the creditors themselves. Under CCC clients typically pay the same amount they are paying now each month. With CCC monthly savings are not that significant and so people with real hardship cannot typically afford to access the advantages of this program. The most significant benefit of CCC is to reduce the total time required to payoff one’s debts. Consumer credit counseling is thus simply a convenient service for becoming debt free more rapidly. This choice is only useful for those who can keep up with their present debt payments.
Debt settlement is a solution for those with significant hardship who does not wish to or don’t qualify for filing bankruptcy. This service reduces the principal on a variety of (typically unsecured) debts by “settling the debts in full” for less than the full balance. Debt settlement is structured by a third party company rather and takes into account the client’s ability to pay and not just the desires of the creditors. Debt settlement creditors are willing to accept a negotiated payoff rather than receive zero should the client file bankruptcy. Debt settlement benefits the client by both alleviating their monthly overhead (and therefore alleviating their hardship) and by also dramatically reducing the total time required to get out of debt. Debt Settlement is best described as an alternative relief to significant hardship caused by debt. This option should be considered for those who have significant hardship and want an alternative to bankruptcy.
Debt settlement and consumer credit counseling have similar goals yet are greatly different in who they serve. Consumer Credit Counseling is a financial choice for those who can afford to have choices. Often those who are good consumer, credit counseling can often just as easily choose other options including paying their debts as they are at present. Debt settlement is for those who have few other choices and are considering bankruptcy or just “letting go” and not paying any more creditors to survive. Restricted by significant financial hardship, other options simply don’t suit debt settlement candidates very well. These services therefore serve different people. Individuals are typically only able to benefit from one of these programs and getting into the wrong program can make a person’s situation even worse