The Pros And Cons Of Hiring A Debt Settlement Company

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Being in debt is something that everyone has had to go through once in a while. It is a fact of life and living. Debts can be pretty overwhelming because you have credit card companies, banks, and other creditors chasing you to pay up, and the interest keeps rising. There are situations where you have multiple debt profiles with different creditors; it becomes draining when you can’t keep up with payments and start considering bankruptcy options. 

 

You may have attended many negotiation meetings with your bank or creditors to restructure your debt balance, but they are not receptive. This is where you need the big guns, a debt settlement company. A debt settlement company is your best chance at catching a break from loan enforcers and banks; they help you renegotiate your debt so you can pay less than what you owe. However, the services are not rendered for free. Pay for it, and they help you renegotiate your debt with your creditors. 

 

If you are skeptical about hiring a debt settlement company, here are the reasons why you should consider them. 

 

They Know Who To Reach Out To

IMAGE SOURCE: https://unsplash.com/photos/RJQE64NmC_o 

 

You cannot take away from debt settlement companies their contact within the finance and credit services business. The hallmark of good debt relief companies is building relationships with the right contact person in any credit services firm that would be beneficial in negotiating a reduction in your debt payment. These are contacts that even you, as the debtor, wouldn’t have access to. 

 

Repay Your Debt in Less Time

 

When you consult debt settlement companies to take up your case and help you reduce it to a bearable amount that you can quickly pay within a short timeframe, it reduces your debt burden tremendously. Also, it gives you enough cash to keep as savings when you don’t have to worry about debt. 

 

Reduces Your Burden

 

You may have been exposed to harassment from your creditor through phone calls and texts that put you on edge, hinting a debt settlement firm about this might make them add an addendum to your negotiations where the creditor gives you space. Also, debt negotiations are always stressful and full of emotions. Contracting it out to them relieves you of a heavy burden. 

 

Make Lawsuits Go Away

 

Give these debt settlement companies that they know how to make the lawsuits filed against you by creditors go away. They make them see why a case may not be the best way, but a reduction in debt payment can create a win-win situation.  

 

Help You Reconsider Bankruptcy

 

Yes, everyone who is in debt considers this route but as much as it helps you send off your creditors, in the future, a bankruptcy filing affects your creditworthiness. So, a debt settlement company could help in a way that you won’t consider filing for bankruptcy. 

 

However, as much as debt settlement companies help you reduce your debt burden, here are some reasons you should reconsider using them.

 

Zero Guarantee

 

There are zero guarantees that the debt settlement company can help you reduce your debt. Sometimes, they cannot make your debts disappear or decline, so it is a 50-50 chance when you’re using them, especially if you have a considerable obligation drawn upon your finances. 

 

Interest Payment Doesn’t Stop

 

When the debt negotiation is ongoing, it still does not stop your credit card company or creditor from drawing interest on the current debt. Also, if you default on your monthly payment because you think the situation is under control, you get an additional bill for late fees payment. 

 

May Affect Your Tax Returns 

 

Filing for bankruptcy reduces your tax payment, especially on the consequences of settling debt. However, when your debt is reduced, you still have to report the outstanding amount as income under the 1099-C, which you have to pay tax on compulsorily.

 

May Not Reduce Your Stress

 

There are situations where they cannot talk your creditors out of harassing you with phone calls, texts, or random visits to remind you that you’re still owing. Also, debt settlement companies may not be able to let that lawsuit disappear even though negotiation for debt reduction is ongoing.

 

They Require Payments Too

 

Do not forget that your debt settlement company requires payment for their services too, and it is not free. When you look at the fees you have to pay these firms, add it to your reduced debt amount. It could be more than the original debt you owe, especially if you owe a manageable amount of debt. 

 

There you have it. The pros, as mentioned earlier, and cons will help you decide whether you need a debt settlement company in your life right now or not. 

 

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