Debt Settlement Consolidation: How Does It Resolve Debt Problems?
One of the options to settle your debts is through debt consolidation. The goal here is to reduce the original balance so it becomes a more manageable and affordable amount for the person in debt.
This is a program to address the mounting issue of debts that a lot of Americans have. Due to the recession, a lot of them lost their jobs and are suddenly unable to pay for what they owe. This also bloated a lot of credit card debts because the lack of cash prompted people to charge their basic expenses just to be able to afford them. Several people have maxed out their cards without any hope of paying them off completely.
Debt settlement is perceived to be the best solution for both creditors and the people who owe them. The creditors are assured that they will receive even just a portion of what they lent while those in debt will be given an easier payment term. They will only have to pay for a portion while the rest will be forgiven.
Take note though, not everyone is approved for a debt settlement. A settlement may be the best option for you but not with the creditor. More often than not, they have lost their investment and they could be quite strict in agreeing to settlements. There are factors that will indicate if you qualify for this or not. The State you live in may also have different rules of qualification so best to do your research first. One for sure, you have to be evidently unable to pay due to lack of funds. If you are found to be paying off another creditor on time, another creditor may not be amenable to a settlement.
Risks to Debt Settlement for Consolidation
There are various risks in debt settlements and one of them is that your creditors may not be agreeable to a settlement offer. Creditors may be more amenable to allow a revision in your payment terms instead. Some of them would rather give you more time to pay and lower your monthly payment temporarily than forgive a large portion of your balance.
One of them, and the most dreaded is you won’t be able to save enough money for your settlement offers. If you cannot afford to save money then you stand little chance of succeeding with your debt consolidation plans. Consider your finances carefully to make sure that you have a stable source of income in order to save money to offer your creditors.
Another risk is that your financial situation will get worse and debt settlement for consolidation won’t provide enough relief. In this case you will likely need to file bankruptcy to get you the help you need. You need to have an income or savings to help pay for your settlement offers. If you lose your job and don’t have any income, you won’t be able to successfully complete a debt settlement program.
It is important to pay your debts but you have to understand that you still have to address your bad spending behavior. If you fail to do this, clearing off your debts may not be the end of your problems. The chances of you repeating the same mistake and putting yourself in debt is not unlikely to happen. You have to address every problem as you pay off your debts to make sure that you will keep your hard earned financial freedom for a long time.
If you need help with your credit woes, NationalDebtRelief.com can offer their services. Just give us a call and we will gladly help you solve and reduce your debts.