Debt settlement is a negotiation where the lending party agrees to clear the loan for lesser money that you own on your word that you would pay it back along the way. Debts are settled by debt settlement companies that act as a third party between the borrower and lender. The debt settlement process comes into the picture when the borrower does not have enough money to pay back the sum borrowed. If the repayment is pending, it could incur serious interests and poor credit card scores. This could be disadvantageous to the borrower in the long run. To safeguard people financial status, debt settlement is the conclusion reached through rational negotiation. However, there are various myths attached to it. To help you know better about debt settlement and to protect you from any false information, here are a few myths debunked.
MYTH -Debt settlement increases the debt.
Debunking myth– This is one of the most popular myths revolving around debt settlement. When viewed superficially, it may even seem right, which is why most people fall for it. The truth, however, is something else. Debt settlement is a way for you to honestly and conveniently back for what you borrowed. There are no tactics that drain more money out of your pocket. Initially, the borrowing party would only need a fixed sum that acts like an agreement saying that you intend on paying for your debt. Following the same, you can choose a fixed sum that you can pay periodically unless the debt is settled. If you look at it, there is not anything safer.
MYTH- Debt settlement affects the credit score.
Debunking myth– Nothing could be farther from the truth. If timely payments do anything, they increase your tax scores. Tax scores are significantly affected by how efficiently and timely you pay your bills or due credits. If you agree with your lending company and you stand true to its clauses, it will boost your credit scores. If, however, you repeatedly find yourself in a position where you are unable to make periodic payments, that may incur a negative impact on your credit card scores. But if you are a loyal borrower, who just needs a little time to put your finances to repay truthfully, your honestly would be acknowledged and without turning into anything disadvantageous.
MYTH- After settling the debt, there is nothing to worry about.
Debunking myth– This might be a tricky assumption, but that did not stop it from being one of the most common ones. If you look at it subjectively, you will see just how flawed this is. First off, the debt is settled, not permanently forgiven. If, for instance, you get some relief in time for paying back X sum of money, it still needs to be paid back. If you do not repay it, that sum becomes taxable. In such a situation, you might end up paying way more than what you signed up for. Once the taxes get pulled in, there is no going down with the money; there is only going up. For somebody who wants to get all debts off their back diligently, this might not be the most pleasant assumption to make.
MYTH- All debt settlement programs are the same.
Debunking myth- The only opposition to this statement is that they are not. The market is open to several debt settlement programs that are customizable according to your requirement and the availability of funds. When you hire a third debt settlement agent, you are charged for their services too. These services primarily include fetching the best and the most affordable debt settlement scheme for you. It takes a lot of effort, money, and knowledge to settle your debt on your own. The wise option is to seek a professional who will enlighten you better on the ways in and out.
There is nothing scary about debt settlement.
You read that right. The financial world keeps coming up with strategies that are equally beneficial to you. It is just a matter of finding the right opportunity. People are scared of hiring a professional to settle their debts, so they can focus on other essential investments and putting their financial things in order is the number of myths that revolve around debt settlement. People fail to realize that the more important thing is to repay the debt. It is not to struggle and barely be able to make it to the mark. It is crucial to keep yourself updated and well informed while also ensuring to enlighten the ones around you to make their financial journeys easier.