Debt Settlement Program

Debt Settlement Program

A debt settlement program can get you out of debt faster than any other debt management program, but is a debt settlement program always the best idea?

What You Need

Okay, what you need is to get out of debt. But to qualify for a debt settlement program, you need to have a lot of money saved up. You're probably thinking, "If I had a lot of money saved up, I wouldn't be in debt!" But if you enroll in a debt settlement program, you don't have to have enough money saved up to pay off all your debts. That's because a good debt settlement agent can get your creditors to reduce the amount you owe by 60-80%! For the sake of easier math, let's say you owe $10,000 in unsecured debt and you have $4,000 in your savings account. If you enroll in a debt settlement program, you could get the amount you owe reduced to the amount you have saved.

So now you're probably thinking, "What's the catch?" The catch is you have to pay that new amount off immediately. Your creditors are giving you a great deal, because you end up paying back less than what you actually spent. So in return, they want their money right away. You're probably also wondering why your creditors would agree to such an arrangement. It's because they know that people turn to a debt settlement program as sort of a "last resort," meaning they think your next step might be non-payment or bankruptcy. They think this might be the last chance to get any sort of payment from you at all, so they take it.

Finally, you might be wondering if participation in a debt settlement program will hurt your credit. You're right to be concerned, because it will. Your creditors will report it, and it will hurt your credit in much the same way as a late payment would. So you have to decide if that's better than not being able to pay at all or being in debt for a long time. It's really a personal decision, but the decision is ultimately yours. Many people don't want to hurt their credit, so they go on paying the minimums with their savings and remain in debt for a very long time or they participate in a different debt management program. We just think that you need to be informed about the debt settlement companies you look at before you make a choice.

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