Debt settlements, also known as debt restructuring or debt arbitration, are a method of reducing one’s debt in which the debtor, by an arrangement and with the consent of his creditor, is only expected to pay a certain amount or proportion of the total amount owed. Debt settlement is a good way to eliminate debt and has become a common method for debt reduction or removal.
The thought of going through the debt settlement process is very appealing. Financial institutions have recently become very generous in terms of debt relief and agreements with their customers, especially in light of the current economic situation. Debtors with a large amount of debt should take advantage of the creditor’s goodwill, as it will end once the government’s stimulus program expires.
Individuals who have opted to reduce their debt in this way can do so through a lawyer working on their behalf, a debt settlement firm, or by interacting, negotiating, and coordinating with their creditors directly.
The following are the top five (5) reasons why debt settlements have become so popular:
- It is far superior to bankruptcy.
Debt settlement enables debtors to resolve their liabilities in an affordable manner by reducing the balance and making smaller monthly payments. Debt settlement in this manner is far superior to declaring bankruptcy. A reduced debt settlement may be completed in a matter of months while filing for bankruptcy would have an effect on one’s credit record for several years.
- It saves money on other expenses.
Long-term debt means higher interest rates, as well as more add-on fees and other financing costs. These incurred charges will, over time, make it much more difficult for a person to pay off his debt as soon as possible. A debt settlement would reduce the amount owed, lowering interest rates.
- It helps reduce the tension caused by debt.
Massive amounts of debt can put a person and his family under excessive strain and stress. Other issues that can occur as a result of this stress include depression, high blood pressure, and other diseases. Dealing with debt collectors will exacerbate the stress. This form of anxiety can only be alleviated by addressing the underlying trigger – debt. Debt settlement will help a person get a firm hold on his financial status and, as a result, much-needed peace of mind.
- It offers a means of preventing legal action.
Creditors can choose to take legal action against a person who owes them money because a debtor is accountable to his creditors. Signing up for a debt settlement program can prevent a creditor or financial institution from suing a person.
- It enables debt restructuring.
Individuals who owe different sums to different creditors will consolidate all of their debt. This means that the debtor would only have to make one contribution to the institution in charge of the debt settlement.
The easiest way to gain financial independence is to spend wisely and stick to your schedule. Send Liberty Debt Consulting a call if you’re ready to take the first step toward fixing your financial problems. We have financial specialists on standby to assist you in fully eliminating your debt.