It is more and more difficult for many people to sustain a stable financial state for a longer period of time. There are many people who are having real struggles with their bills and many of them end up carrying a number of financial obligations. Once you start to carry even a single debt, you may think that you would be able to get rid of it in no time. But there are many things that can easily go wrong. Having that extra bill at the end of the month that you need to take care of can actually push you to get another loan just so that you can manage all of your bills, and just like that, you can find yourself in a lot of financial trouble.
Not every person is able to pay off what he owes
With so many people struggling with multiple financial obligations, there are many different financial tools and methods available for people to improve their chances of paying off the money that they owe to their creditors. However, in many cases, even with the best of effort and financial methods, people still find themselves unable to get rid of their financial obligations. If you have tried to pay off the money that you owe for a while now, and are still getting nowhere, you may not be all out of options.
What can you do when you are no longer able to make your financial obligations payments?
As we have said, there are many tools available to people that are struggling with multiple debts. However, not all of them are able to succeed in reaching their goal of financial freedom. There are those who are not only unable to improve their financial situation and repay all the money that they owe to their creditors, their financial situation is actually progressively getting worse over time. These people reach a point where they are no longer able to make their monthly repayments. So for them, paying off their financial obligations in full is no longer a viable option. Luckily, there is a service that is designed to help people in such situations, and that service is called debt settlement.
What is debt resolution and how can it help you?
This is a process that allows people who are no longer capable of making their monthly debt repayments to reduce the actual financial obligation amount and pay off these creditors with a single, lump sum payment. The service is meant only for people who, for some reason, cannot continue with their financial obligations repayment process. If you are able to make your payments on time, but you want to take advantage of this financial method, you will simply not be able to, as you would not get approved for it. The benefits of this service are quite obvious as you would ultimately be able to get a portion of your financial obligations forgiven, which will leave you with a smaller debt amount to repay.
How does it work?
The first thing you need to do when considering this option is to contact a financial obligation settlement company. The job of this financial obligations settlement company is to negotiate with all your creditors on your behalf with the purpose of reducing the overall debt amount that you have left to repay to all of these creditors. Your repayment process is going to change completely. Instead of making multiple payments on different accounts to all your creditors, you would be making a single payment and that payment will go to your financial obligations resolution company. The company will create a special account for you and that is where your money will be going. Once the sum in that account is big enough, the debt settlement company will start the negotiations with your creditors. Once they reach an agreement, the financial obligations settlement company will use the money from the account to pay off all your financial obligations. Once this is done, you will no longer owe a single dollar to your creditors. Another thing worth mentioning is that the single monthly payment that you will be making to your debt resolution company of choice is going to be less than what you would normally pay for all of your financial obligations bills.
What are the cons of this service and how is it going to affect your credit score?
Of course, financial obligations resolution sounds pretty good on paper. However, as you may already know, things are often a lot more complicated than they may seem at first. It would be great if you could just reduce the overall amount of money you owe, pay it all off and get on with your life. Things are, of course, a bit different. When you start the debt settlement process, as mentioned above, you would need to start making a single payment to the company that will negotiate will your creditors and will ultimately settle your financial obligations. That means that for this period of time, you would not be making your regular debt repayments directly to your creditors. While this is part of the process of financial obligation resolutions, all of these late or missed payments will be reported to the credit bureau, which will massively damage your credit score, you may also start to receive collection calls. All these late payments are going to stay on your credit report for up to seven years. All that would make it extremely hard for you to get a new line of credit or any unsecured type of loans. It may even affect your chances of getting a competitive insurance rate or even your chances of getting a job. If the company that is settling your financial obligations manages to actually negotiate your debt repayments, all the information of your late payments is not going to be erased. Instead, the information on your account is going to be updated as “paid-settled” or “charged-off settled”. None of these two options is as good as having your account as “paid in full”. So if you are actually considering the option of using debt settlement, you should really pay attention to what it may do to your credit score and your overall financial future. If you believe that you are in a position where you may be able to find some other ways to actually repay all that you owe to your creditors in full, that may actually be a better alternative for you than using financial obligations settlement.