The debt settlement process is considered as the life after debt process as it promises a person with debt free future without having to pay back a cent. So many people are taking advantage of this option by approaching legitimate credit repair companies. These companies assure them that the debt would be settled and they will not have to pay back a single penny. This is nothing but a lie and this is what many companies do in order to earn money. They promise to do good for your credit score and later take money from you only after you have incurred huge debts.
Debt Settlement is a process which was introduced by the Federal Trade Commission in America to help consumers get out of massive debts. It is a new procedure that is being followed by thousands of debtors who want to overcome their problems and gain a debt free life. This process works by negotiating with the lender and getting him to eliminate your late fees, payment penalties and other hidden costs. This eliminates your chances of bankruptcy, which is a very big threat for any consumer who is suffering due to huge unsecured credit card debts.
After the elimination of these charges, you will still have to make monthly payments in order to pay back the rest of the amount. But at least you will get a good credit score and no need to worry about your debt repayment. Once you are done with the settlement process, you will not be asked for a loan or any kind of additional financial help from any other financial institution. Your credit score will automatically improve because the debt settlement company will inform the credit reporting agencies about your accomplishments.
This is how the debt settlement process works and it can help you in saving a large portion of your original debt. Once you have obtained a good credit score, you will not face further problems regarding finances. You will be able to purchase real estate, cars, homes and other high-valued commodities on a small scale and you will enjoy these things without having to go through a debt relief process.
When you have a good credit score and if you have utilized the debt settlement program successfully, chances are high that creditors will offer you secured credit cards and unsecured credit cards. The only problem that you may face here is that these cards carry a high rate of interest and they also have a very low spending limit. So if you do not use these cards efficiently, it is obvious that you will have to incur a lot of expenditures over a period of time. If your expenditures are more than the savings that you make in a month, then you will certainly run out of money very soon. It is quite obvious that this situation will lead you to the risk of bankruptcy.
The threat of bankruptcy should not scare you because there are numerous debt relief solutions available in the market today. Among all these solutions, debt settlement is considered as the best solution. You should not go for bankruptcy because this option will have severe consequences on your credit report. When you use this option, you will have to pay back a very low amount that will be considered as your down payment. Once this is done, you will have to negotiate with your lender and convince him or her regarding the fact that you cannot afford to pay the full amount. Your lender will help you get a discount and this discount will further reduce your credit report to negative points.
On the other hand, if you use debt settlement and if you pay the down payment in a prompt manner, it is obvious that you will not face any negative points on your credit score. The financial experts use a very simple approach and they try to convince the lenders that the best way out of debt is to simply get a settlement and clear off the debts. You must remember that this will not create a good credit score for you. However, if you use the debt settlement process after improving your credit score, you can easily improve your credit score. There are numerous financial experts in the market who can help you get a good credit repair process started on the day that you settle your debts.
These professionals can also clear off all your pending dues and payments so that your credit reports do not report any overdue payments. If you manage to maintain a good credit rating till the time of settlement, it is obvious that you will have to pay lower interest rates and affordable installment amounts. This will automatically result in lowering your credit scores, but you should try to keep a track of the actual improvements that are being made.