Debt settlement relief is being touted these days as "the answer" for folks like you and I who have found ourselves buried in consumer debt, and desperate to get our heads above water. And it's hard not to be at least curious about the possibility of slashing the amount of debt you owe by 50, 60, even as much as 70%.
But of course, these massive savings in debt come at a pretty hefty price. And I am not even referring to the fees that you will pay to a debt negotiation company to achieve these type of savings. Even if you go the "do it yourself" debt settlement route, which can save you thousands of dollars in fees by the way, there will be a "price" attached.
That price comes in the form of a devastated FICO score and a credit report that doesn't look much better. A bad FICO score and credit report will likely cost you a lot of money in the future in the form of extremely high interest rates (not to mention your ability to even obtain credit), and should not be taken lightly.
In a word, no.
Keep in mind that it is not for everyone. Just because you are in debt, (even if it's a lot of debt, like say $40,000 in credit card bills) that alone does not mean you are a candidate for a debt elimination/settlement program. So who does a debt settlement plan make sense for?
The quick answer, and I realize that everyone's situation is different, is...
In fact, many people who do enter into a debt settlement program, likely would have been better off pursuing bankruptcy from the get-go. Needless to say, just because you are heavily in debt does not mean you should consider settling your debts this way. If you are not sure exactly where you stand financially or what your options are, I encourage you to seek out some professional advice. Often you can find companies online that offer a free debt and finance analysis to help consumers determine the proper course of action they should take to rid themselves of debt. These companies often provide a range of services, (everything from credit counseling to debt settlement to bankruptcy filing), so there is a better chance that you will end up in an appropriate debt relief program.
So what do I mean by "financial hardship" when it comes to considering debt settlement relief? Here are some examples. (There are of course other situations that cause financial hardship but this list should give you an idea of what I am talking about.)
1. Serious Illness - serious illness can hit people on two fronts, loss of income and large, unexpected medical bills
2. Decrease In Income
3. Loss Of Employment
5. Death In The Family - if the sole breadwinner in a family passes away without proper life insurance, many times families are left in financial ruin
6. Personal Injury - an unexpected injury that prevents you from earning an income can have devastating effects on your finances
For people or families suffering these kinds of hardships, debt settlement relief may be an appropriate option. Often times, due to one of these hardships, debt payments have been missed for several months and FICO scores and credit reports have been severally affected already. It is at this point that, as an alternative to bankruptcy (which is much more difficult to achieve these days), that debt settlement releif should, or can be considered.