Are debt settlement offers good?

Debt settlement offers can be reasonable if you understand the whole picture. It has become an increasingly popular choice among most Americans heavily in debt. Is debt settlement offers good? Yes and no.

Is Debt Settlement Offers Good?

Debt settlement is a good option if you are about to run out of options and your debt is overwhelming. It can provide you relief, but it also has possible drawbacks. So, the best thing to do is to know your options before you commit and consider the potential pros and cons before you decide.

What is a debt settlement?

A settlement is an agreement between you and your creditor. You, as the debtor, will request that your creditor allow you to settle your debts but less than the total amount you owe them. You can offer them a lump sum or ask them to consider letting you make a monthly or a series of payments. Either way, it will be less than that total outstanding debt. What happens to the remaining balance? The creditor agrees to your terms and forgives the balance.

What are the advantages of debt settlement? Here are a few:

• Potential savings
• Relief from debt collectors
• Bankruptcy avoidance
• Possibility of a lower interest rate
• Better payment plant

Disadvantages always go with the advantages. So, here are some facts to consider:

• Impact on credit score
• Difficulty in getting credit in the future
• Possible tax consequences
• Strained relationship with creditors

Accepting debt settlement offers will be a great option if bankruptcy is imminent. But before you go down that path, it would be best to talk to your creditors first and exhaust all possibilities. It cannot be stressed enough that when you apply for a debt settlement, only go for reputable companies you can trust to work for your benefit.