Debt Settlement Relief Companies–Debt Settlement Programs May Erase Debt But Do They Harm A Credit Score?

Consumers who have acquired a substantial amount of personal debt and are in a position where they are having difficulty repaying these obligations often turn to debt settlement companies in order to find relief from these debt obligations. Debt settlement is something that many consider to be helpful for some, as this form of debt relief assistance allows consumers to use companies or agencies to negotiate more affordable debt repayment options with their creditors.

While debt settlement has been a way many consumers have gained control and affordability within their personal financial life, there are mixed feelings about debt settlement companies and some financial advisers feel that debt settlement may do more harm than good for some consumers. Also, concerns over fraudulent debt settlement companies who offer debt relief services is a factor when consumers consider using debt settlement for their personal finances.

Obviously, consumers who see advertisements or offers for debt relief from a debt settlement company feel that they can greatly benefit from these services, as many of these institutions offer to negotiate either a lower payment plan, a reduction in debt through debt forgiveness, or options for completely erasing debts in some cases. While there may be some opportunities concerning these debt relief opportunities, there are fraudulent debt relief services who offer to settle consumer debt, but may either charge excessive fees or simply seek to scam consumers in a bad position.

For consumers who are considering debt settlement assistance, advisers often strongly caution these men and women to explore various companies, research any institutions or agencies which may look promising, and ask for qualifications like accreditation and inquire about upfront fees before moving forward with a debt settlement organization.

Yet, some advisers warn against even turning to these debt settlement companies for personal debt relief as they can do damage to one’s credit score. While there are numerous ways to hurt a credit score, debt settlement can be unfavorable to an individual’s personal credit score and history, so this needs to be considered by consumers before proceeding in a debt settlement agreement.

However, there are consumers in such a bad situation with their personal debt that the risk of hurting their credit score is almost inevitable since they are unable to meet their payments on various debt sources. Yet, nonprofit credit counseling agencies can be helpful as well, but consumers may also contact their creditors personally to arrange more affordable payment plans, a reduction in interest rates, or even a forbearance on debt payment requirements. Obviously, debt settlement can be beneficial for some consumers, but it may not be right for everyone and should only be pursued after a great deal of research has been conducted and the consumer finds that debt settlement may be their only option.