Various debt repayment assistance plan are available for consumers who may have a high amount of credit card debt or various personal debts in their life that have become problematic, but when consumers reach a certain situation where their debt is quite severe, debt settlement for these consumers that have a high amount of credit card debt or other personal debt obligations may be the only option they have remaining. However, when it comes to debt settlement programs, consumers must take action before turning to debt settlement options as there are some drawbacks that consumers experience when settling debts through a debt settlement organization or credit counselor.
There are a great deal of opinions when it comes to debt settlement, as there are some advisers who feel they should be completely avoided, or an absolute last resort, but there are also some cautions that consumers need to heed when they are seeking out a debt settlement program, as debt settlement can do damage to a consumer’s credit score and when a fraudulent organization or a poor debt settlement company is at work, it can put a consumer in an even worse position.
Usually, consumers have either stopped paying their creditors or are told to cease payments on these credit card obligations, but there are some who feel that consumers must make sure a settlement agreement is worked out before they begin changing their repayment habits. As an example, the National Foundation for Credit Counseling states that, “Typically, the settlement company will promise to attempt to negotiate a settlement with a creditor once the consumer has accumulated enough money in the settlement account, a process that could take years, although the exact length of time will vary with circumstances.”
It’s easy to see that there are some dangers that may be involved with certain types of debt settlement, as it could do a great deal of damage to a consumer’s score if they simply stop paying their creditors as their settlement company begins to work out a settlement agreement. Yet, not all credit counseling organizations or debt settlement companies will work in this manner, and consumers are prompted to heavily scrutinize any debt settlement offer they may be given for their particular situation, as transparency in a debt settlement company is vital when it comes to avoiding any problems that may arise from misuse of payments a consumer makes or simple poor advice in terms of repaying creditors.
Many debt settlement companies, particularly those involved in telemarketing, cannot collect upfront fees, and many consumers are advised to avoid organizations that may want a consumer to pay before any settlement is reached. Usually, consumers that have benefited the most from debt settlement are those who will talk with a credit counselor, attempt a debt management plan, and if debt settlement is necessary, will work with an organization that will talk to creditors, work out a repayment plan, and outline these agreements, payment structures, and any fees for a consumer before the settlement process truly begins.
While there are consumers who are simply in a bad position and must either seek out debt settlement options or run the risk of defaulting entirely on their credit card debt, this issue is not something that should be ignored and, since credit card debt is one of the major debt problems many consumers face, addressing issues related to repayment difficulties early is more helpful for consumers and may help them avoid the need for debt settlement altogether. Yet, if a debt settlement plan is necessary, consumers will see a setback in their credit score as they will be paying less than originally owed to various creditors, but even if this action is necessary for certain individuals, researching a debt settlement organization and factoring in aspects of their practices must be considered by a consumer so that they will avoid further setbacks during this process.