Debt settlement plan-The most competent debt management program
Debt Management July 29th, 2011If you are submerged in debts and looking for some debt management plan which won’t affect your credit ratings in any way, then you are simply building castles in the air. All debt management plans affect consumer’s credit scores some way or the other. Debt settlement plan is also no exception but it is probably the best possible debt solution one could think of. Read on to know why debt settlement plan is considered better than other debt management plans.
What is Debt settlement?
With a debt settlement program you can eradicate up to 40 to 45 % of your overall debts. You can strive to settle your debt on your own, but you might be more likely to be successful if you take expert help and hire a debt settlement company or an agency to negotiate with your creditors. A debt settlement company can certainly handle paperwork and negotiations with greater experience and expertise. The arbitrator persistently put forth sincere efforts to settle your account to a considerable amount which is acceptable to both the consumers and the creditors and the rest of the debt balance gets waived off. Debt settlement program is more profitable in comparison to debt consolidation or credit counseling plan from a consumer’s point of view and should not be even compared to bankruptcy in any way.
The repayment terms and procedure
Once you settle your debts, you need at least 30 months to repay the new debt amount whereas the average time debt consolidation and credit counseling program takes is approximately five years. There is a hell and heaven difference between the repayment durations among several debt relief options and debt settlement stays ways ahead in this race of attaining financial freedom.
The total amount repaid by the consumers
If you settle your debts you have to pay average 55% of your debts whereas with debt consolidation and credit counseling, consumers end up paying 100% of their debt along with average of a 5-10% interest rate for five years. In short with debt relief programs consumers pay off 125-145% of their debt, but in debt settlement the amount is much less.
Credit
Debt settlement has adverse impact on the consumer’s credit score. After settlement the creditor report the account as “settled” or “paid as agreed” whereas throughout the debt consolidation and credit counseling program the credit bureaus report that consumers are “currently enrolled in a debt management company” and keep reporting the same for another seven years. This not only blemishes the consumers’ credit history but also raises a major red flag for any creditors for mortgages or auto loans or credit cards, and personal loans in the long run.
To conclude, with all the above mentioned features and this new FTC law coming into effect, a debt settlement plan has proven to be one of the best debt management plans available right now.
