By Manuel Tovar, July 21 – Hispanic Solutions Group
Debt settlement can be good or bad, depending on your situation. Then, Hispanic Solutions Group It hits you with some potential risks associated with debt settlement:
The harsh truth is that the creditor can reject the settlement offer. Therefore, it is possible that you and thedebt settlement must submit a counter offer. You could also be forced to contact the original creditor to see if you can work out a payment plan. At worst, you may owe more than you initially do, and a rejected settlement offer can bankrupt you.
The fees paid to a debt settlement company or the fees and interest charged by an original creditor could add hundreds or even thousands of dollars to your debt.
Negative impact on credit score:
Because creditors are motivated to settle a debt only when they think it is the only way they will be paid, your accounts may already be past due or are as you make payments to the debt settlement company. . A debt settlement will lower your credit score, perhaps by more than 100 points, and the damage could last for a while – a debt settlement remains on your credit report for at least seven years.
Alternatives to debt settlement
If found overwhelmed by debts, you have several options that are less risky than debt settlement, whether that means working with a debt settlement company or conducting debt settlement negotiations on your own. Here are four alternatives for debt settlement and we introduce them to you.
- Balance transfer:You may be able to switch your debt through a balance transfer to a credit card that offers a 0% APR for an introductory period, perhaps up to 18 months. If you pay off the balance before the 0% period expires, you can avoid accruing interest on the debt.
- Debt Consolidation Loan: A debt consolidation loan can allow you to combine multiple debts into one manageable monthly payment at a lower interest rate than what you are paying now, which would be the best option.
- Steps if you want to go ahead with debt settlement:be sure to consider the impact this will have on your credit. For example, how low could your credit score be and how long will debt settlement stay on your credit report? And how much will the debt settlement company charge for negotiating with your creditors?
- Bottom line:Debt settlement through a company carries significant risks. Therefore, it is important to weigh potential alternatives, such as debt consolidation or nonprofit credit counseling, before committing to a relationship with a certain debt settlement company.
We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram to find more information related to finances. Also on our YouTube channel The Credit Channel to learn how to improve your credit. If you need help in repairing your credit, disputing debts that do not belong to you, or other services, call us at (612) 216-1599.