subject: Debt Settlements - How Will Getting A Debt Settlement Effect Your Credit Score? [print this page] First and foremost a person's credit is definitely going to be affected and lowered when they opt to get a debt settlement. He or she will be considered a high risk for 1-2 years after the settlement. This effect on your credit score however will not nearly be as bad as bankruptcy. A debt settlement will stay on your record for about 1-2 years while bankruptcy will stay on for nearly 7 years. With the new bankruptcy laws debt settlement is clearly a better option to eliminate debt.
So, how does the process work then? Through negotiation between you and a creditor or a counselor acting on your behalf a reduction in your owed balance can be reached. By the time it is all said and done, the percentage of debt that you owe is tremendously lower if not eliminated all the way. A debt settlement agencys fees are considered reasonable when compared to the savings and debt they will be able to eliminate.
Debt settlement has an impact on consumer rating. Primarily due to the fact that the debt has been settled creditors will still attempt to contact you and get a portion of your finances. There could be great harm associated with your credit rating and all due to the use of a piece of plastic with numbers on it. And, it even gets worse if the bills on your credit card have been delinquent for quite some time.
Another factor that is taken into consideration is the fact that the threatening phone calls and annoying letters will still come to you and it will continue until the debt is negotiated for a fee or eliminated indefinitely. If a debt settlement is successful you might not even be required to pay anything else on it. Things such as back taxes, or any other IRS lien, all debt is forgiven. And just think, you didn't have to file bankruptcy either. Just finding a good negotiator is the key. When your credit is affected it's like having no credit. In fact some people say that. Having no credit is as bad as having no credit at all.
Debt settlement companies are so popular right now for a reason. The reason is that almost everyone is in debt and credit card companies are very concerned about collecting. They are being forced to agree to generous debt settlements and you as the consumer should take advantage of this. For a legitimate debt consolidation or settlement company in your area check out the following link:
