Dealing with debt is a challenging task. It not only affects your finances but your mental health also. One needs to have discipline, control, and a strong will to get out of debt. The burgeoning interest and late fee on your credit card or loan can add more to your stress. Multiple calls from the creditors, home visits from collection agency executives, and more become overwhelming, leading to extreme stress, anxiety, and sleep loss. And that is when an individual starts looking out for options to deal with the debt. The truth is that nobody likes to get into the debt trap willingly, but your intent to get out of the debt matters the most. We come across many people who are often concerned about choosing debt settlement to resolve their debts and live a debt-free life.
So, what are the concerns about debt settlement?
Time & Efforts
First thing first, who should choose it?
As mentioned before, debt settlement is not for everyone. You should only opt for debt settlement if you are going through financial hardship and cannot repay your debts. The debt resolution program aims to provide debt relief measures to already struggling consumers. Financial hardship could be a medical emergency, loss of income in the form of pay cuts or job loss, and more. Such legitimate hardships can happen to anyone at any point and cause financial trouble in an individual’s life.
Kinds of Debt and Delinquency
One can settle most kinds of unsecured debts. Unsecured loans include personal loans, credit card debts, payday loans, peer-to-peer loans, education loans, and business loans (without collateral). Delinquency plays an essential role while resolving debts. Borrowing money based on their future income could turn into a problem. In case of prolonged delinquency, the bank declares your account as a non-paying asset (NPA). Once a person is delinquent, the individual will be eligible to settle the account depending on the type of account, the amount you owe, account delinquency, and the creditor.
Last but not least, to enroll in a debt settlement program, the person must have the means to afford a debt settlement program. Therefore, after all the monthly expenses, one should save a certain amount for the debt settlement program in a Special Purpose Account.
Why should one choose settlement over default?
Debt settlement should be considered the last option to resolve debts; it is almost like an insolvency alternative. Wilful default disposition on the credit report chokes all your options for future credit lines, whereas once you rebuild your credit score after settling your accounts, your options for a new credit line will start to open. In a nutshell, wilful defaults disposition closes all the doors for future credit while in case of settled disposition, you can work on rebuilding your credit score.
Need more information about debt settlement? Contact us on 0124-6663666 or visit our website to know more.