Is debt settlement a viable option for financial challenges?

On Behalf of | Jun 6, 2023 | Bankruptcy |

Florida consumers who are struggling with their financial obligations could feel caught in the middle. Fortunately, there are strategies that could be effective to address their situation. One that is frequently advertised is debt settlement.

What are the positives and negatives of debt settlement programs?

Debt settlement is different from bankruptcy in that the debtor will negotiate with creditors to try and find a solution. If it is successful, the person will likely pay less than they otherwise would have. Prior to moving forward with a debt settlement program, it is important to understand the benefits and drawbacks.

In addition to possibly reducing what they owe, the debtor could also pay it in a shorter time-frame. A common lament among people who owe substantial sums is that when they fall behind, they are bombarded by debt collection calls. A successful debt settlement program will end that. Finally, it might keep them from filing for bankruptcy.

Although it sounds like it is a great idea, there are negatives associated with it. Since it is not a legal action like bankruptcy, the creditors are under no obligation to negotiate with a debtor. It can be costly in other ways with the debtor needing to pay fees. It can damage their credit. Finally, they might face tax liabilities after getting a reduction in what they owe through a debt settlement negotiation.

People have options when facing vast debt

Being in debt is stressful and those who are confronted with this issue may not know where to turn. Debt settlement is just one way to get on stronger financial footing. There are other perfectly reasonable choices to consider like bankruptcy. Regardless, it is essential to know the pros and cons of every strategy to make an informed decision on how to proceed.