The fact that many Americans are steeped in debt cannot be denied. The government itself is getting into debt in its attempts to deal with numerous bad loans.
Is there some kind of debt settlement agreements that you can reach to help you get out of credit card debts?
There is no definite yes or no answer, as there are a number of related issues to be considered. Debt settlement or even filing for bankruptcy can accomplish different things.
Would they give you the opportunity to get out of your financial predicament and move forward as you live within your means? Depending on your spending practices, these methods can just offer you a temporary breathing space before you fall deeper into debt once more.
While debt settlement option may be of help, it is a step that you should only take if you see that it will create a long lasting change in your financial situation. There are some important points that you need to bear in mind when you plan to take the route of debt settlement.
First, remember that as soon as you start negotiating with your creditors about making lower payments than what you actually owe, your credit rating will suffer a significant dent. When your lenders accept a lower payment, they incur a loss, and they make up for this by reporting your unpaid debt to the credit bureaus.
This alone will have a negative impact on your credit rating for seven years!
Another fact that you should consider is that you will not negotiate directly with the lenders. You will need the services of debt settlement companies to act on your behalf. These companies are notorious for charging exorbitant fees. Many of them require you to make an upfront payment, which effectively leaves you will less money to pay off your debts. If you get a company that accepts payment after negotiating, you may end up losing a high percentage of the forgiven debt as their commission.
There are many pitfalls in the debt settlement path that can easily counter any good you expected to gain by using the companies in the first place. It may be better to simply file for bankruptcy instead. The courts clearly govern the processes involved in filing for bankruptcy. Bear in mind that bankruptcy will likewise feature on your credit rating for seven years.