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What are 3 things to know about debt settlement?

You have credit card debt, and much like others in your situation, it's a growing concern. You know that having debt isn't good, and you want to pay it off. It's a substantial amount, though, and you're not sure you can get ahead on your payments.

The good news is that there are options for getting rid of your debts. They include settling your debt, going through bankruptcy or consolidating your debt. In the case of settlements, there are a few things to keep in mind before you agree to do so.

Settlements aren't guaranteed

If you call a credit company wanting to settle, you'll need to show why you have to. Lenders won't settle for just any reason. It's pertinent that you show you're in a difficult spot financially.

You shouldn't usually pay to settle your debts

When you contact a debt-settlement company, you might end up paying back more than if you'd settled on your own. Remember, you can negotiate directly with your lenders. If you don't want to negotiate directly, consider allowing your attorney to do so. You'll know exactly what your attorney's fees are, so you're not blindsided by fees, restrictions or other losses as a result of working with a less-than-straightforward debt-settlement company.

Debt settlement still hurts your credit

Yes, debt settlement still hurts credit scores. If you settle your debt for less than you owe, the company may mark that the debt was settled but not in full. This could impact your credit score negatively.

Your attorney can speak with you about other options than settlement if you want to protect your credit. Whether you want to consolidate or need a bankruptcy, there's help for you.

Source: Creditcards.com, "8 myths about settling credit card debt," Sally Herigstad and Karen Haywood Queen, accessed Feb. 07, 2018

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