Debt Settlement
Some people are not sure what debt settlement is. They think
that somehow some of the debt that they owe mysteriously
disappears and you now owe less than you did. This is kind of
true – but it isn’t as magical as it sounds. Instead it can do
some real damage to your credit if you don’t do it right.
There are companies that specialize in debt settlement and that
is all they do. You call one of them and ask them to help you
reduce the amount of debt that you owe and they call all of your
creditors for you and for a price. You pay them to negotiate a
lower balance on your credit cards or medical bills, or whatever
it is you owe on. Then they tell you the new balance, you pay it
and you are debt free.
Seems simple? Yes it does, but depending on how it is listed on
your credit report it can also be very bad for you. Many
creditors see a debt settlement as the same as a bankruptcy, so
if you are doing it so that you don’t have to go bankrupt, you
might want to reconsider. It all depends on how it is reported
by the credit card company to your credit report. If they say
paid in full then you are fine, but quite often it is marked as
account settled, which tells everyone that you did not pay the
full amount that you owed them and makes other creditors
hesitant to loan you money.
If you can afford it you are better off getting a debt
consolidation instead. A debt consolidation can help you
streamline the amount of debt that you owe, and help you pay
back less than what you would if it was still on your credit
cards, but when it is paid back it is marked paid in full and
your credit is not destroyed by it.
SIGN UP
