The Good And The Bad With Debt Settlement

Author: Steve Bis

2007-12-07 Word Count: 438 Category: Debt Consolidation

Credit card debt settlement is one of the small number of possible systems available to those riddled with credit card debt. However just as with anything else there are pros and cons when regarding settling your credit card debt balances.
First we will start with the cons.
1. In most instances your credit score will go down. No original creditor will be willing to make a settlement until you have fallen significantly past due. So when you are past due your FICO credit report will take a negative decline. However the negative remarks from debt reduction are able to be fixed, a good credit corrections company can get those negatives removed.
2. Harassment from collectors. As you can imagine you will receive phone calls in an attempt to collect the money they feel they are owed. Depending on what establishment you use for credit card debt relief, collection calls can be greatly reduced if not stopped. But you will receive collection activity to some measure.
3. There are the potential for lawsuits. Lawsuits are always a possibility, while it does not occur anywhere near as much as one might think it does happen. Again with a decent establishment this process can be deferred so a negotiation outside of court can be reached. When you are being sued the collector filing for suit often is aware that they will not collect the full balance and the creditor is most often very willing to make a settlement.
Now for the pro's.
1. The fantastic savings! You can honestly look to save between 40-50% of the amount of debt you owe. Not only will you save money off of your current balance, but you must take into contemplation the amount of cash you would be forfeiting through minimum payments and high interest.
2. Get out of debt extremely fast. Of all the debt relief avenues, settlement will put you on the fasted path to becoming free of your debts. You can be looking to get out of debt within 2 years or less. This is a long shot away from how long it would take to be out of debt through minimum payments.
I personally think the pros do heavily outweigh the con's. Nothing is worse than losing hundreds if not thousands of dollars every month for what will be decades through minimum payments and high interest. Debt with credit cards is death to your finances. How in the world can you save or invest for the future when you are just trying to get by each month to stay up to date with your credit card.

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