Debt Settlement is not for the Faint of Heart

We all will in up in debt at sometime in our lives. For most it is the usual mortgage, car loan and a couple of credit cards. For many it is much more and they cannot seem to be able to repay these debts. Turning to a debt settlement company is one solution. However Debt Settlement is not for the Faint of Heart and also comes with considerable risk as well. It is important to know what the process is to really understand why it can be even more stressful than dealing with debt.

Basically you stop making payments to the companies you owe money to. It is important to place the usual payment amounts into an account that you cannot touch. You will need this money later. After a few months your account will build and if you let this process go long enough, you may have sufficient money to pay half or more of the debt. This is when your debt settlement company will begin negotiations. Their objective is to have your debters write off as much as 50% of your debt.

Debt Settlement is not for the Faint of Heart – Risks

There are numerous risks associated with this approach. For example, your credit rating is going to tank if you follow this approach. Future loans etc will be impossible to obtain. There is no guarantee that the debtors will accept this negotiation. They may play hardball and demand payment in full. Now you owe all of the accrued interest and payments along with whatever fee you agreed to pay the debt settlement company!

You may also still need to declare bankruptcy and they may not be able to manage all of your debt. Some debt may remain and you may find that you need to declare bankruptcy as a result. Both are bad situations to find yourself in along with the waste of time, money and damage to your credit rating.

The best solution is repay all of your debt and don’t get into this situation in the first place.