The Risks and Benefits of Personal Debt Settlement

Personal debt settlement is an alternative to having a professional handle this process for you. Here are the benefits and risks associated with personal debt settlement.

Benefits

  • Eliminate the debt--The biggest benefit of debt settlement (whether handled by the debtor alone or by a professional) is effectively eliminating debt. By negotiating a lump sum payment, you can get rid of the account and not have to worry about it anymore. Paying off debt can lift a weight off of your shoulders and allow you to focus your finances in another direction. 
  • Avoid fees--An advantage to doing the process by yourself is avoiding what can be costly service fees. Hiring an attorney or debt settlement agency to help you with your negotiations will cost you money that could better be spent to eliminate the debt. You can legally do everything without the assistance of anyone else. If you can handle the process, it would be to your advantage to do so.
  • Faster process--When you simply handle everything by yourself, it will usually be a faster process. You can call the company that you want to settle with and take care of it over the phone. If you involve someone else in the process, it will just add onto the time that it takes to complete the job. You will have to explain your situation to them, and then they will have to negotiate with the company for you. They will then have to get your authorization to proceed. This just adds extra, unnecessary steps to the process. 

Risks

  • Overlook important aspects--When you take on the process of settling your own debt, there is a chance that you could overlook something in the process. Debt settlement experts, such as an attorneys, can provide you with their experience in the industry. With their expertise, they should be able to catch potential problems before they happen. For example, by some careful negotiation, they may be able to help you avoid damaging your credit. If you overlook negative things on your credit file, that could have some lasting consequences that you have to deal with. 
  • Not get as good of a deal--When you opt to do the process by yourself, you will probably be less certain whether you are getting as good of a deal as you possibly could. An experienced professional in this field will know when to keep fighting and when to take the offer. This could potentially result in a much lower settlement fee to your creditor. In that case, the professional's fee could be well worth it. 

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