These days a lot of consumers can be seen struggling with their credit card payments. The problem arises when the credit amount on their card goes beyond the minimum balance and hence they find themselves in huge debts. It is at this particular time that a large number of consumers facing this problem seek to different debt settlement schemes. Yes, debt settlement is the latest trend in the financial industry. However, in awe of clearing their debts at a much lower value than the actual amount, many consumers today fail to realize that debt settlement is not really a solution but merely an alternative for a trap as hideous as bankruptcy.
Most of the debt settlement programs talk about clearing all your debts at a lower amount or through ways which does not involve borrowing more money. Some even boast about methods that will not only make you debt free in merely some months but will also do not impact your otherwise monthly income or cash flow. However, very few of these services and companies offering debt settlement schemes focus on the idea of employing lump sum payments for increasing the probably of your financial success.
According to the rule of thumb, a dent settlement company will provide you with a program that focuses on saving some fraction of your monthly income or leftover money and maintain it in a settlement account. Then the company will consult your creditors and negotiate with them so as to bring the debt amount to a value lower than the original. Basically, the debt settlement company acts as a mediator between you and your creditors to frame a negotiated settlement value which you can easily pay. The entire process generally takes a time anywhere between thirty six months to sixty months. Though this may sound as an easy way out from all your debt problems, however, it comes with many drawbacks. The major one being that you will be also paying fee to debt Settlement Company as well which is generally not a less amount.
Another better and more effective alternative for debt settlement scheme is to go for making lump sum payments. The idea behind this concept is to shorten the time period for which the payment is supposed to pay. This can be easily achieved by making larger sums of money from time to time. Therefore, the probability of you clearing all your debts without irritating the creditors is highly considered.
For making lump sum payments, you need cash. Therefore, you must begin by hunting for different opportunities of generating cash. For instance, one of the easy ways will be to tap all the access to the loans or the assets you possess in order to clear your complete debts. You can even consider selling anything you have which is worth a huge amount such as your motorcycle, boat or even your car. Another helpful possibility will be to try and borrow money either from your friends and family. You can even borrow some amount from your retirement account. However, in such a case you must be prepared to face the consequences in case you fail to pay back this entire borrowed amount. Before you take on any such step, it is always a good idea to consult either your financial advisor or tax planner with your retirement account as they will not only help you in weighing the pros and cons of the situation but will also aid in making you understand the long term consequences you may face or impacts your financial condition may face in times to come.
Stella Benson is a credit advisor and a financial researcher at http://debt-settlement-review.toptenreviews.com/. Her recent research paper focused on the different ways of debt settlement. She is currently based in Vancouver.
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