Debt relief can be achieved through debt consolidation. If you have a good credit score or equity to back up a large loan, you will be able to save a lot of money from interest.
Debt settlement is just one of several options for dealing with debts, and may not be best suited for everyone. There are a few alternatives to debt settlement, so before you go through with debt settlement, and deal with the possible negative side effects, it’s important to make sure it’s actually what you need for your debt.
Can you afford to make your minimum monthly payments right now?
If you’re comfortably making the minimum monthly payment on your credit cards each month, then debt settlement may not be the solution you need. By paying the minimum on your credit cards, you’re probably not hurting your credit score. When you stop making these minimum payments, which is almost always a condition for debt settlement, your credit score will likely suffer.
If you’re making the minimum payments and you can afford to make a little more, then you might consider a debt snowball where you send a higher payment to one of your credit cards each month (while making the minimum on all your others) until that card is paid off. Then, you’ll do the same thing for another credit card. Repeat until all your cards are paid off.
When you’re making your minimum payments, but feel the pinch in your budget, you may consider consumer credit counseling. Credit counseling agencies talk with your creditors to negotiate a lower (more…)
Debt settlement is made more difficult by the fact that you typically have to have a lump sum of money on hand when it’s time to settle your debts. When you make monthly payments to a debt settlement firm or you put monthly deposits into your own debt settlement account, it may take months to accumulate enough money to settle your debts. All the while, your debts get more delinquent, more fees are added, and the debt gets larger.
With Settlements, Time is Money
The longer it takes to come up with the money for a settlement, the more money you’ll probably need to save up for a settlement. For example, if your credit card balance is $8,000 at the date you last make a payment to the creditor, six months later, it could easily have grown to $8,500 or $9,000 with interest and late fees. That means you’ll end up probably settling that debt for at least $250 to $500 more than what you would have if you had enough money to settle sooner. It may not sound like much money but if you multiply it by 8-10 for that many additional debts, then it’s an extra possible $5,000 that you’ll have to come up with for debt settlement.
Settle Sooner With Home Equity
If you have home equity available, you might consider (more…)