If you feel as if you were falling into a sinkhole of debt, don’t be despondent. There is good help available in the form of a debt settlement plan. In fact, a good debt settlement plan offers five important benefits.
Relief from stress
Once you have a debt settlement plan, you’ll be relieved from the stress and anxiety associated with having to cope with your debt load. You may actually wake up in the morning feeling good about the day ahead instead of dreading phone calls from unscrupulous debt collectors.
Elimination of collection calls
The second benefit of a debt reduction plan is that it will eliminate virtually all calls from debt collectors. If you do receive a call, you can contact your debt settlement company. It will call the collection agency, inform it that it is now representing you in all matters pertaining to your debts and that it is not to contact you again.
Debt settlement is a form of debt consolidation in that once your debt settlement company has settled your debts, you will no longer be required to pay any of your creditors. Instead you will send the debt settlement company one payment a month that will be affordable. In fact, if you choose an honest and reliable debt settlement company, it won’t charge you a cent until it’s presented you with a payment plan that you approve.
Help with budgeting
Many of the top debt settlement companies have debt counselors who can help you create a budget so that you can do a better job of managing your debts and finances in the future.
A debt settlement plan should result in a timely pay off so that you can become debt free in a reasonable amount of time. As an example of this, National Debt Relief is almost always able to help its clients become debt free in 24 to 48 months. This is in comparison with the debt management plan you would get from a consumer credit counseling agency, which typically takes five years to complete.
Better than bankruptcy
A debt settlement program is almost always a better option than filing for bankruptcy. Some financial experts believe that a bankruptcy lowers your credit score by as many as 200 points. This could take you from having a “good” credit score of 720 to a “poor” credit score of 520. While debt settlement will also have an effect on your credit score it will probably lower it by only 80 points.
Seven to 10 years
A bankruptcy will stay in your credit report for either seven or 10 years, depending on the credit-reporting bureau and is a public record that will follow you throughout your life. How debt settlement is handled on your credit report varies from credit bureau to credit bureau. It may be reported as ” debt settled for less than the full amount due,” “partial payment accepted,” “settlement” or ” settled.” In any of these cases, it will leave a blemish on your credit report that will remain there for probably seven years. But again, it won’t be as serious as if you had filed for bankruptcy.
Choose your debt settlement company carefully
The debt settlement industry has something of a bad reputation and for good reason. If you see debt settlement as a good alternative, do your homework before signing up with any company. There have been a number of fraudulent companies operating in this area. You need to select one that has been in business for more than five years, that has a number of favorable reviews and that charges no upfront fees. If you contact a company that requires payments up front, shun it at all costs as it is likely to be a scam.