Must know facts about debt settlement
While credit card debt settlement can be one of the more lucrative routes to take when looking to get out of debt, just like any other credit card debt relief system there are a few of off putting aspects to it which someone needs to comprehend before going through the process of credit card debt settlement. However just as with anything else there are pros and cons when regarding settling your credit card debt balances.
First let us unveil the cons.
1. In most situations your FICO credit score will suffer. No collector will be willing to make a negotiation until you have fallen at least 2 to 3 months behind. So when you are past due your FICO credit rating will take a unfavorable hit. However the derogatory strikes from credit card debt settlement are able to be fixed, a legitimate credit corrections company can get those negatives taken off.
2. The harassment you will receive when falling behind. As you can see you will be getting calls over the phone in an attempt to collect the debt. Depending on what company you employ for credit card debt settlement, collection calls can be significantly reduced if not stopped. But you will receive calls to some extent.
3. Potential of being sued. This is always a possibility, while it does not occur anywhere near as much as one might think it does happen. Again with a good establishment this process can be put back so a deal outside of court can be reached. When you are being sued the company filing for suit usually is aware that they will not collect the full balance and the creditor is usually very willing to make a settlement.
Now for the pro's.
1. The great savings! You can honestly look to save between 40-50% of the current balance. Not only will you save money off of your current balance, but you must take into contemplation the amount of income you would be forfeiting through minimum payments and high interest.
2. Get out of debt extremely fast. Of all the credit card debt relief systems, settlement will put you on the fasted route to becoming debt free. You can be looking to get out of debt within 3 years or less. This is a far cry away from how utterly long it would take to be out of debt through minimum payments.
I personally feel the pros do considerably outweigh the con's. Nothing is worse than losing hundreds if not thousands of dollars every month for possibly decades through minimum payments and high interest. Credit card debt is detrimental 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 current with your credit card.
Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in debt settlement.
Published December 5th, 2007
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