“Debt settlement can settle your debt once and for all by a significant amount which will be less than the actual debt. You can hire a debt settlement company to negotiate with your creditors on your behalf and settle your debt effectively; making it more convenient than credit consolidation loans.”

Sometimes, we just get so focused on swiping our credit cards here and there, we never pays attention to the big fat debt being accumulated on them. So, if you are drowning in  overwhelming credit card debt, you are dead broke, and the only thing you could do is to pray for a miracle like winning a lottery, well, I am happy to inform you that there is a way out that may actually work for you; debt settlement.

What is Debt settlement?

Debt settlement is an agreement made between a creditor and borrower. In which the creditor decides to accept a onetime lump sum in return of forgiving the remaining debt. It can settle your debt once and for all by a significant amount which will be less than the actual debt. You can hire a debt settlement company to negotiate with your creditors on your behalf and settle your debt effectively. Making it more convenient than credit consolidation loans.

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Why debt settlement?

Settling your debt for a lesser amount than you owe may seem so good to be true, but getting a discount is actually not that difficult. If you ask to the right person, in the right manner. Creditors usually fall for debt settlement because either they need money desperately. Or they know if they don’t settle for this, they may not get anything at all. A debt settlement agency may know exactly how to convince the creditor of these facts and successfully settle for the lowest amount. This makes negotiating through debt settlement slightly more preferable than credit consolidation loans or debt management.

How settlement works?

While you decide to settle your debt through appointing a debt settlement agency, this is how things work;

Your debt settlement agency will instruct you to stop paying your creditors altogether, when your debt settlement advisor tries to negotiate and settle the debt on your behalf. Instead, you make one monthly payments to the debt settlement company. You will have to encounter the frequent and irritating calls and messages from your creditor to repay your overdue bills. But sorry, you have to bear it. After 180 days, or when they get tired, they usually write off the debt and transfer it to the collection agencies at a face value. To retrieve the debt.

That’s where the debt settlement company comes back to action. They negotiate further till the creditor, now the collection agency; will agree the settlement. Then the debt settlement agency pays off the debt with the money you are paying to them. The only concern is whether the creditor will agree to the settlement. You might be able to cut your debt up to 50-60% through negotiation.

After appointing the debt settlement agency, you can stop paying your bills; instead you will have to make monthly payments to the settlement company. It may sound like credit consolidation, but instead of one loan for all debt where you combine your entire bill, get a loan with lower monthly rate of interest and pay all debts. Debt settlement reduces the principle of the loan itself. 

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How this affects you? 

Although it is a quite promising way to deal with your debts, it has its own affects. It can reduce the debt to a much lower and fair settlement, but you may need a significant amount of cash at one time at hand. So make sure you have the money enough to settle the debt once before signing in with a debt settlement agency.

  Debt settlement frees you from the burden of credit debts, but you will have to close your credit card account completely after the settlement due to your poor track record and performance. 

Debt settlement can have a negative impact on your credit score, as it will be reported in your credit history. It can be a disadvantage, but not as destructive as a bankruptcy. So better settle the debt than getting declared as bankrupt. And, although your debt decreases, you’ll still have the liability to pay tax on the whole amount. 

Debt settlement can take some time to achieve. But if you are able to afford a lump sum for onetime payment, it is the best option you have. You will have to make monthly payments to the debt settlement agency. Just like for a credit consolidation loan or debt management program. And, as long as you can afford settlement money and on time monthly payments, debt settlement is better than one loan for all debts scheme.

Wethinksolution is a debt consolidation agency in Dubai. We offer debt management services like credit consolidation loans and debt settlement plans. From effective debt advice, to helping you with our responsible one-loan-for-all-debt short term loans, we are the answer for everyone in need.