Negotiate a Debt Settlement - Debt settlement

Debt settlement - what are the pros and cons?

what are the pros and cons for a person that settles their debts with credit card companies for less than the amount owed? (Debt settlement) and how does this affect your credit rating afterwards? thank you ahead of time for all responses!

Public Comments

Debt settlement companies make you out to be a deadbeat and you pay them fees that make you wish you had just paid the creditors. Your credit is trashed. If you qualify for bankruptcy, go that route. If you don't then consider a non profit debt management company (www.nfcc.org) but steer away from things that sound too good to be true. Those settlement companies are very profitable ... for themselves. Where do you think they get the money to advertise all over the place??? From the clients!!!
Excellent question and please do not listen to the previous answer from rayt721. There will always be some good companies and some bad ones in the same industry. I enrolled in a debt settlement program just over a year ago and things have worked out perfectly thus far. Aside from receiving some calls from the creditors over the first few months, everything has gone the way that I expected. It's quite unfortunate that people like rayt721 make comments on subject matter that they don't have experience to comment on. If you are in debt and can't afford it, do your research and pick a legitimate debt settlement company to help you out. Hopefully this helps.
OK, I have to put my two cents in. I was $8,000 in debt and went to a credit management company that my creditor referred me to. Basically the credit management company is someone who "buys" the debt off of your original creditor. I was able to lower my monthly payments and things really did work out for the best. HOWEVER, when you participate in programs like this you are obviously required to "give up the bottle" because the credit card companies close their accounts with you. On a credit report, one could intepret this as meaning that the credit card company closed your account after it went into default. As a result, your credit could be adversely affected by going to a consumer credit management company but not significantly so; I was able to rebuild my credit soon enough (although I destroyed it later, but that's another story).
There are two issues here: (1) Debt settlement and (2) using a debt settlement company. (1) with debt settlement, PRO you get rid of the pressure of being in collection and can start getting your finances organized. CON you have not paid as agreed and some of your debt has been written off. This is not good for future credit. (2) using a service, which doesn't do anything you can't do yourself. PRO you get somebody to talk to who is familiar with the process and CON they are expensive and that's money that could be used for payment of debt. Getting the money together for the settlement company's fees also delays sending money to the creditors, which could make matters worse. There isn't much in the way of regulation. Some of the settlement companies can do something for you, some exaggerate, and some are scum learning the business while you pay their tuition.
Debt settlement Pros: cut payments dramatically, save alot, be debt free fast Debt settlement Cons: credit rating will be bad while you are in the program and probably at least a year after, you could still face collection calls and harassment from your creditors. Debt settlement, also called debt negotiation, is a form of debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money. Bills.com does a pretty good and honest evaluation of all of your alternatives. The debt help stuff is the most valuable: http://www.bills.com/debt-help