Debt Settlement May Not Be Your Best Bet for Managing Your Debt
Here's why debt settlement may not be your best option for getting your debt under control, along with some other debt management options that may be a better choice for you.
You've seen a lot of ads for "debt settlement" or "debt negotiation" in the mail, on TV, and online promising to "eliminate your debt" or help you "get out of debt fast." If you're struggling with debt for any reason, these offers may sound enticing, but it's important to know that these offers may not be your best bet for managing your debt.
Debt Settlement: Not the Best Option
Here's why debt settlement may not help you improve your debt situation, and may even make your financial situation worse:
· What debt settlement means is getting your lenders to accept less than full payment for your debts. This debt will appear as "settled" on your credit report, which hurts your credit score because you didn't pay the debt in full.
· In some cases, you may be told to stop making payments on your debt. If you stop making payments, your credit score can be hurt, and you could face additional problems, such as legal action. Avoid any debt settlement option that tells you to stop making payments.
· You may be required to pay a large fee in advance, along with other fees every month.
· You may be pressured into an option that isn't right for your situation.
Help With Debt Alternatives
Depending on your financial situation, these options for managing your debt may allow you to protect your credit score and take action to get a handle on your debt:
Debt Consolidation: Debt consolidation may help you improve your credit and save money by lowering your interest rates and the amount you owe every month. Debt consolidation may also help you organize and streamline your finances with just one payment.
For more information about debt consolidation, visit our Debt Consolidation page.
Refinancing. Depending on your situation, refinancing may be able to lower your monthly payment or interest rate and free up extra cash to help you manage your debt or save for emergencies. You may also be able to get extra money with a cash out refinancing loan.
Visit our Mortgage Refinancing page to learn more about refinancing.
Personal Loans: Personal loans are guaranteed by your promise to repay it. Personal loans are also called unsecured loans or unsecured personal loans because you don't need any collateral, like your home or car, to guarantee the loan. Personal loans may be able to help you consolidate your debt or allow you to make a special purchase at lower interest rates than credit cards.
For more information about personal loans, visit our Personal Loans page.
Financial Counseling: Financial counseling may be able to help you find ways to increase your income and decrease expenses, work with your creditors, find out what debt help is available, help you make the best decision about managing your debt, and plan for your financial future.
There are other options for managing your debt in addition to these. Ask a financial or legal expert to help you decide which debt management options are right for you and make a plan to get a handle on your debt. Remember to avoid agreeing to anything that seems too good to be true or too easy to do.
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These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action. Contact us for more information.
