If you’re drowning in debt, it’s tempting to participate in a debt settlement program to help alleviate your debt burden. Debt settlement is often for individuals who are unable to afford to pay their current debt and for those who want to avoid bankruptcy but have used up all their options to pay back their debt. But do debt settlement programs actually work? It’s worth assessing the advantages and disadvantages of debt settlement programs to determine if they work for you. Here’s what you should know:
The debt settlement company pays a lump sum amount to your creditor to settle your debt. Sometimes this amount is far less than the full amount you owe. However, the creditor must first accept the offer.
Debt settlement programs may offer some benefits. For instance, you can get your debt discounted. That’s because debt settlement companies negotiate with your creditor to help you resolve your debt for an amount that is less than what you originally owed. Also, you can stop receiving collection calls and letters from your creditor when your debt settles.
Debt settlement programs aren’t always ideal. Some cons of participating in debt settlement programs include:
If you’re considering a debt settlement program to resolve your debt, it’s important to take into account the pros and cons. Also, review your financial situation and your ability to pay back your debt. If you decide that participating in a debt settlement program is ideal for you, read the fine print and choose a reliable debt settlement company that has a good reputation and customer support.
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