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Weighing the Benefits of Debt Settlement


Weighing the Benefits of Debt Settlement

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									Weighing the Benefits of Debt Settlement
by Karen Bacani on Monday, August 15, 2011 at 2:07am

Debt settlement is an agreement with a creditor to accept a lower amount of money to resolve the
money owed. Debt settlement can be attempted with the original creditor, but it is usually after
the debt has been sold to a collection agency that debt settlement comes into play. There is, of
course, no guarantee that the current creditor will settle. Larger agencies are usually easier to
settle with than smaller ones, but if you’re in trouble it’s an option that should be looked into no
matter what. Let’s look at some of the pros and cons of debt settlement here.

The Positive Aspects of Debt Settlement
Debt settlement can be extremely helpful to a lot of people. For starters, you can be free of a large
debt for less than the full amount owed. Obviously, this can save you more than a small amount of
money. In many cases, the debt amount can be reduced by 40-60%. Your credit status will be
improved by no longer showing a delinquent item. In some cases, creditors will even agree to
delete negative information already supplied to the credit bureaus. Also, debts resolved through
debt settlement are no long subject to collection calls or other collection action.

The Negative Aspects of Debt Settlement
There are a few negative aspects to debt settlement, but most of them should be entirely
avoidable to an informed consumer with a competent agency on your side. Creditors do have the
option of reporting the settlement to the credit agencies as a settled debt rather than as paid in
full, so make sure you know in advance what they plan to do in that regard. Additionally, make
sure you receive the terms of the settlement IN WRITING from the creditor. If you do not, they
may sell the remainder of the debt to a collection agency and you may not be able to prove that the
debt was legally settled. Additionally, collection agencies are required to report any forgiven debt
of more than 0 to the IRS, which can then be counted as taxable income for you. Talk to a tax
professional about that if possible. If you have a negative net worth, you may be able to avoid
being taxed on forgiven debt.

Obviously, there may be more pitfalls or advantages to debt settlement as regards your specific
situation. Only by speaking to a debt settlement professional can you be made aware of these
issues. A good debt settlement company will be reputable and accredited and be staffed with
professionals who can examine your personal situation to determine what is best for you. Most
companies will be able to give you a free consultation without any obligation to go through with
doing business with them. Try contacting a few companies if you’re not comfortable with the first
one you speak with. It’s always good to be aware of how much they’re charging you and what you
might save by going with another agency. Once you find an agency you’re comfortable with, you
may discover that debt settlement is the right thing to do for you.

Debt consolidation help / Debt settlement attorney

Debt Settle, Inc. specializes in the process of settling debts for our clients. Debt settlement is a
relatively new form of debt relief that goes far beyond what debt consolidation and credit
counseling can offer on many different fronts. your payments on consumer debt have become an
unworkable burden, it’s time to consider your options on how to get things back in line.

Debt negotiation services / Debt consolidation help

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