The Good And Bad Of Debt Settlement

By Author: J.J. Yong
Total Articles: 962
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When you are in debt, they only thing you ever think about is how to reduce or eliminate the debt permanently. Because as you know anything bad involving money will surely show on your credit report, thus lowering your chances at getting many other things such as a job or lower car insurance. Of course you are considering debt settlement, that is how you got to this article and I would like to share the advantages and disadvantages of having a settlement so that you can make an informed decision about your next course of action.

You should choose debt settlement because:

· You get to avoid bankruptcy - this is very important because once you have filed for bankruptcy, this will remain on your credit report for at least seven years and you know what bad credit does.

· Only have one payment to do - if you are enlisting the help of an agency, you will only need to pay to them and they will pay your creditors on your behalf.

· Avoid stress - you will get to avoid being harassed with the collection calls and unfair practices

· No extra charges - here your company can help you eliminate ...
... any late fees or even any over the limit fees by ways of negotiation

· Avoid legal complications - You get to avoid being sued or face any legal action as you are in a settlement program trying to pay back your dues

You should NOT choose debt settlement because:

· Your credit score will drop - when you opt for a debt settlement program, you will stop paying your bills so that you will have a lump sum to settle your debt. In this time, you will accumulate late charges and because of that your credit score will drop.

· Taxes - for the debt settlement write off, you might have to pay taxes on the amount you save from paying the creditors. IRS will require you to pay the Cancellation of Debt for this forgiven amount.

· Your credit score account status - will show "Settled" instead of "Paid in full". Of course this will be a negative thing as it should say paid in full.

If you know anyone how has done this before, interview them. Ask them all the questions you have and if they would recommend you to choose this or find another solution.
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