First things first: what is a debt settlement? Well, a debt settlement means a creditor has agreed for you to pay less than the original amount you owe as a full payment. A core part of the debt settlement process is negotiating with the creditor to establish what the settlement sum will be.
Debt settlement—and we can’t stress this enough—is not a casual solution to a couple of minor debts. It’s intended for those to use as a last-ditch option prior to filing for bankruptcy.
A debt settlement can greatly affect your credit. After your debt has been forgiven by creditors, that debt and your payment history will stay on your credit report for up to seven years. Though you may not have to make payments on a debt that has been settled, you will still see the effects of the settlement long after it has been processed. During that time, it’s important you meet with a financial advisor or someone you trust with your financial information to ensure you’re approaching the settlement in an intelligent, long-term way.
If you’re thinking about debt settlement, first take a detailed look at your existing debts, interest rates, and payment plans. Are there any other options you haven’t yet exhausted in the process of managing your debts? If you aren’t sure, it’s always an option to ask an expert or financial advisor you trust. At Cain and Daniels, we make it our mission to provide up-to-date information on how debt settlement and other debt management methods truly affect people.