Debt Settlement is a Smart Alternative
The primary benefit of debt settlement is settling debts for much less, often 40-60% less than the total balance owed. This can help you become debt-free more quickly by eliminating large portions of what you owe. Debt settlement also avoids the high legal fees and rigid process of bankruptcy.
Additionally, debt settlement is better for your credit than bankruptcy. Settled accounts will show as “settled” on your credit report rather than “bankruptcy.” Debt settlement will not leave a scar on your credit report for the next seven years like bankruptcy does. Having a bankruptcy on your credit report can hinder you in so many ways. There are many creditors that will not give you credit or a credit card just because you have a bankruptcy on your credit report.
Debt Settlement Programs Help You Avoid Bankruptcy
Enrolling in a professional debt settlement program is an effective alternative to filing for bankruptcy. These programs work on your behalf to negotiate reduced payoff amounts with your creditors and consolidate your debts into one manageable payment.
By stopping payments and allowing accounts to become delinquent, debt settlement firms can negotiate debts down to 40-60% less than you actually owe. This eliminates large portions of your debt and allows you to become debt-free much faster than bankruptcy.
Debt settlement also prevents the bankruptcy notation on your credit report which can hinder your ability to get credit for 7-10 years. While settlement will impact your score initially, it will start to recover after debts are settled.
Refinancing and Consolidation Options
Two common approaches are:
- Debt Consolidation Loans – These replace multiple debts with one personal loan at a lower interest rate. This makes repayment easier with one monthly bill at better terms.
- Home Equity Loans – For homeowners with equity, a home equity loan or line of credit can provide funds to pay off credit cards and other debts. The interest is usually tax-deductible as well.
When structured properly, refinancing or consolidation can reduce monthly payments and total interest costs. However, these loans still require repayment in full, unlike options like debt settlement. Refinancing is mostly helpful for reducing interest rates, not eliminating debt.
Get Help from Debt Relief Companies
Seeking assistance from reputable debt relief companies offers a way to settle your debts while avoiding bankruptcy. These companies provide education and resources to empower you to resolve debt on your own terms.
Debt relief professionals can evaluate your financial situation and customize a debt settlement program to fit your budget. They will negotiate with your creditors on your behalf to reduce balances and interest rates. This simplifies the process and makes repaying your debts more affordable.
The right debt relief company won’t pressure you into one solution but will explain your options. Their services can be invaluable when weighing alternatives to bankruptcy. They can even handle creditor negotiations for you to help settle your debts for less.
Know Your Options before Deciding on Bankruptcy
While bankruptcy may seem like the fastest or easiest solution, it has significant long-term consequences and should only be used as a last resort. Fortunately, debt settlement provides a viable alternative to repay debt under more favorable terms without damaging your credit as severely.
Debt settlement allows you to resolve debts for much less than you owe while avoiding the bankruptcy notation on your credit report that hinders future lending. Settlement programs can negotiate your debts down by as much as 40-60%.
Before making any decision, educate yourself on debt settlement alternatives to find the right debt relief solution for your situation. With an advisor’s help, there are almost always better options than bankruptcy if you make the effort.
Don’t simply accept bankruptcy as your fate without first exploring debt settlement, which allows you to become debt-free on manageable terms without destroying your credit for years. Know your debt settlement options first before resorting to bankruptcy.