Debt Settlement Services

What are debt settlement services, and how can they help you become financial free? They are companies that will basically negotiate for you to get you better terms on your financing. Using one of these services is almost always the last resort before filing for bankruptcy.

The reality is, it is far better than bankruptcy. This is because it does not have nearly the same negative impact on your credit score. Bankruptcy can harm your score for up to seven years after filing, where debt settlement only affects it for 2-3 years.

Also, your personal possessions are not at risk either. If you were to file for chapter seven bankruptcy, you would run the
risk of giving up personal property. This is not an issue with settlement.

How does it work? A service will negotiate with the creditors to get you better terms. They are generally quite cheap, and usually will not charge you until they have gotten results. Obviously you have to pay them a fee, but it is not exorbitantly high.

However, there are some things to be leery of. Be aware that some of these companies are flat out scams. They will charge you before they have even started negotiating, and then will make little to no effort to get you better terms. In essence they just steal your money.

How do you spot these companies? You can either check with the better business bureau, or read customer reviews about them.
If other people have had a negative experience, you will know to avoid them.

Should you negotiate yourself? Some people go this route to save money. However, a professional service (whether it be a company or lawyer) will know exactly how to interact with the creditors to get you to get better terms.

They will be able to tell you what paperwork you need, and will also help you format your letter to the creditors to get the best results. This letter basically explains why you need better terms, as it outlines the changes in circumstances that make this necessary. Therefore, it is one of the most important parts of your negotiation efforts. If you did not hire a professional service, you might not include enough information to make a convincing argument.

How effective are these settlement services? In many cases, they will be able to eliminate 50% or more from your total obligations, whether it be by lowering the interest rates, or dropping the total balance. If you tried to do this yourself, you would not be nearly as successful. While you would save money upfront, you would pay dearly down the road.

So how do you find the top debt settlement services? Really the best way is to read reviews online. You do not necessarily have to go with a local company. There are national companies that can handle this process over the phone. The important thing is that you see what past customers are saying about them, and whether they got results or not.

Conclusion: do not file for bankruptcy, until you know that is not an option. Using debt settlement services is a far better option. Simply take your time, read reviews, and hire a good company to help with debt negotiation.

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