Debt Settlement – Is it For You?

Credit scores are very important to your of daily life. Your credit report is used for multiple purposes such as applying for loans, potential landlords and prospective employers. Recent financial downturn in America has affected the credit ratings of many people negatively, and many have incurred large credit card debt.   Sadly, many people are having trouble paying off their balances.

You might be familiar with several companies propagating their services for debt settlements. They want to convince people to hire them to negotiate their credit card debt and lead them to believe that this will help with credit restoration.

Does debt settlement actually work? Well as far as debt settlement goes, it is a perfectly legal process and though which your creditors are ask to accept less but declare the debt as paid in full, when it comes to debt settlement companies, you should be very cautious.   Several companies exist for the sole purpose of scamming your hard earned money and they do not have any interest in your credit restoration, rather, they only want your money.  Some even offer Christian debt settlement services, when in reality the origination has no religious affiliations at all.

According to the Credit Repair Organization Act, any company asking for upfront payment for debt settlement and credit restoration is illegal, and the individuals found in association with these companies are subject to criminal prosecution. But there are companies who work within the bounds of the law and they can assist with debt settlement.

Another thing you should be aware of is that most people choose debt settlements who want to avoid bankruptcy. In circumstances of having a good credit score, settling your debts will have a negative impact in your credit restoration process.  Debt settlement should be use as a last resort only. Success of debt settlement depends upon how well you convince your creditor that you will file bankruptcy.  Only in this case is debt settlement viable. You need full understanding of the credit restoration process so as to avoid any action which could lead to the decline of your credit score.