A Guide to Debt Settlement Services
If you have a hard time getting bills paid, you should file a Chapter 7 bankruptcy instead of going for the debt settlement option. Filing a Chapter 7 bankruptcy wipes the slate clean giving you a fresh start and can allow you to rebuild your damaged credit right away. You will no longer owe anything to creditors and the cost can range from $1,000 to around $2,000. This is less expensive than debt settlement services. While debt settlement costs a hefty penny. Some companies charge anywhere from 14 to 18% of your overall debt amount, while others may ask for a large percentage of what they settle your debt for.
There are many options to wipe out or eliminate your debt and you should always fully research all of your options before jumping into the first one that sounds promising. While bankruptcy may seem like the preferred way to go in most situations, it is not always the best option. Most of us would rather start fresh, but this like anything else can have its downfalls. Bankruptcy usually takes longer. You should fully research your options and steer clear of ones that require big fees upfront.
Debt settlement may not be the best option for some, but for others it works wonders. There is a common confusion between debt consolidation, credit counseling and debt settlement. Debt consolidation allows people to borrow a sum of money to get rid of debts that are smaller, while credit counseling offers repayment plans that offer low interest so those who borrow have the ability to eliminate their debt over a period of time. With debt settlement, you usually works with a professional company which advises you to stop all payments in order to save enough money. In the meantime, the company will negotiate and reach settlement with your creditors in order to pay off the debt faster. On average, a debt settlement can take from 18 months or longer. There are some cases however that can be done in less time. It all depends on your personal situation.
If you decide to go with debt settlement services, there are a few things you should consider first. By enrolling in a debt settlement program, you will not pay your bills for a while before you save enough money for settlement negotiation. This can damage your credit score. Moreover, settle a debt for less can also negatively affect your credit standing.
There are many creditors that use law firms to collect debt now, so they can file law suits against the borrowers who are in default. A lawsuit can lead further including liens and garnishments. There are even creditors that go legal instantly.
Some debt settlement companies have found the weakness for those who are trying to not only prevent but to avoid bankruptcy. Some companies are out just to get huge fee. After that they run off and you never hear from them again. The end result is lost money when you can’t afford it. That’s why it is so important for you to shop around and research on customer reviews or potential complaints to the debt settlement companies that you might choose.
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