In United States, debt settlement has become one of the most popular financial options among people in debt.
However, it is not the best for everyone.
There are some drawbacks you need to bear in mind.
In order for the service providers to proceed for settlement, the debtors are required to sign up an agreement.
After signing it, the debtors are required to abide all the terms and conditions stated in the contract.
There is no more flexibility for them to make payment.
If they don't have sufficient cash available in their accounts and they fail to make payment to the service providers, the settlement plans can be terminated.
Again, the creditors or debt collection agencies will start chasing them for payment again.
At the same time, their credit score will be affected badly too.
If the debtors' intention is to have instant fix on their credit rating, debt settlement is definitely not the right choice.
In common, the creditors normally report their debtors' repayment as "paid" or "settled".
The reports definitely show to other financial institutions or lenders that the debts are not paid in full.
This will definitely affect the debtors' credit when they are applying for loans.
The credit reports look bad for the duration of 7 years until all the negative items are removed completely.
Hence, if the debtors aim to have good credit score within short period, settlement plan is not suitable at all.
Before you decide for debt negotiation, you are reminded that this process takes a long period.
Do you have ample time and patience to undergo this process? Do not expect to settle your debt by writing ONCE to your creditors.
It needs a lot of negotiation effort.
If you think that you can't take the stress, you had better look for other financial options.