Debt settlement is the process of hiring a person or company, normally a lawyer or a company that specializes in this kind of work, to bargain down the amount of money that you owe on or debt or some other terms of your contract. For the most part, this process, if successful, will leave you owing a mere fraction of what you owed previously. With a good representative, your debt can be decreased by as much as ninety percent.
This is a great idea for several reasons. Obviously it leaves you in a much better position financially. But what isn't so obvious is that it doesn't hurt your credit all that much, especially when compared to bankruptcy. A settled debt does show up on your credit score, and is a strike against you.
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However, bankruptcy is the single worst thing that you can possibly do to hurt your credit score. It is the only thing that stays on your credit score past the normal time limit at which a strike expires: seven years. Furthermore, in some cases the benefits of debt settlement will actually help your credit out. This is because the lesser amount of debt that you have counts in your favor on your credit score. It doesn't happen that your score is increased that often, but it is possible.
And finally, sometimes debt settlement doesn't even show up on your credit score. On occasion, a good debt settlement company is able to bargain with your creditor so that they won't report this to the major credit agencies. Settlement is definitely the better of the two choices.
By the way, by researching and comparing the best debt settlement services in the market, you will be able to determine the one that meet your specific financial situation. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.
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