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7 Great Reasons to Opt for Debt Settlement

Are you struggling with overwhelming debt due to financial hardship such as unemployment, medical problems, divorce or another life-altering event? If you have more than $10,000 in debt and you're barely making ends meet, even making minimum payments to creditors each month can be impossible. Unfortunately, each payment you miss adds more penalties and interest to your debt, and it continues to escalate.

For many people today, this is the situation that leads them to file for bankruptcy. While bankruptcy seems like their only alternative, there's actually another option to consider. Debt settlement allows consumers to pay off their creditors and become debt free in just a few short years.

What is Debt Settlement?

Debt settlement programs are a way to pay back your debt at a reduced rate in as short a period of time as possible. A professional debt settlement company will work out a plan whereby you make automatic payments to a settlement trust account in your name. This account accumulates cash that in time is used to settle your debts one by one.

Debt settlement companies are experts at negotiating with creditors, and they're usually able to settle debts at 35% or below the actual amount you owe. That means you pay your debts off quicker, pay less overall, and emerge from the program debt free with all of your accounts marked as "paid in full" or "settled in full."

Although it isn't right for every one, there are many advantages to entering a debt settlement program, especially compared to other options. The following are the 7 reasons to opt for debt settlement:

1. You can avoid bankruptcy.

Bankruptcy is a drastic step that should only be considered when financial situations are so desperate, there are no other alternatives. Bankruptcy is costly, it will devastate your credit history for the next ten years, and it involves a stressful and emotionally draining process. Debt settlement is a way to avoid the high costs of bankruptcy.

2. You can pay off debts quickly.

If you have substantial debt, it could take decades to pay back your creditors, especially if they keep adding on more and more interest and penalties. Debt settlement programs are designed to allow you to pay off all of your debts in 3 years or less.

3. You don't have to borrow more to pay off debts.

Unlike debt consolidation, there's no need to take on more debt in the form of a new loan to pay off your debts with debt settlement. You simply save up enough money for your settlement company to make a reasonable offer to your creditors. When you exit the program, you're debt-free.

4. You don't have to risk your home to pay off debts.

Refinancing your mortgage or taking out a home equity loan might seem like a great way to pay off debts. Yet by doing so, you're putting your home at risk. If you can't afford to pay back your loan, you could lose your home. For those facing financial hardship, this is a real possibility.

5. Debt settlement puts an end to harassment by creditors.

A debt settlement program can put an end to the stress of constant calls from creditors demanding payment. As part of the program, creditors will be informed of a change of address and telephone number, so calls will be directed to your settlement company. They will then deal with your creditors on your behalf. In most cases, calls cease almost immediately.

6. Debt repayment is affordable.

You'll pay less on each of your debts with debt settlement, and that means your monthly payments will be much more affordable than trying to make minimum payments on your own each month.

7. You'll learn to control spending.

One important aspect of debt settlement is that in order for the program to work, you must stop using credit cards. Entering debt settlement programs provides the discipline many people need to start controlling spending, live within a budget and stop charging on credit cards once and for all.

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