Debt Settlement Strategies
debt settlement
If we were to come up with a single word to explain the concept of debt settlement, it will be: forgiveness.
Indeed, once a borrower decides to pursue the debt settlement approach, he will seek the forgiveness of the creditor so that the latter will be amenable in formulate terms which will be advantageous to both parties, such as lesser or total removal of interest rates and/or late payment fines, payment of the main amount only, to deduction of the main amount by as much as 65%.
The main concern most people want to know about debt settlement seems to be this: will creditors accept the said terms?
The answer is: yes. Creditors would rather get back what they have provided - notwithstanding the conditiona which may be unfavorable for them - rather than forever lose the chance to recoup the same, like, for example when the debtor flees for another country, becomes incognito, or files for personal bankruptcy.
Debt settlement is an often neglected debt relief option, which comes as a surprise considering the fact that it's one of the most practical and one the easiest debt cures a debtor can ever take.
A few things to note about debt settlement, however:
Debt settlement does not relieve the debtor from the payment of the main obligation. Debt settlement only provides simpler terms for the debtor so that there be higher chances that he will pay his debt.
Debt settlement can lower the debtor's FICO rating. In this day and age, a person's FICO rating is treated as a digest of his sense of of financial responsibility. If a person has a low FICO rating, he is said to be financially irresponsible and such entails several consequences, like, for example, a harder time in being granted new borrowings and smaller chances of being employed in high paying jobs, among others.
Debt settlement may decrease the amount of the loan to be fulfilled, but, such reduction must be declared as income gained when filing your tax return. Indeed, you will be taxed accordingly for the difference you managed to save.
Nonetheless, debt settlement still exists as an excellent alternative for people who are in desperate need to find some debt relief.
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