Connect with us

Business

3 Impacts Of Debt Settlement On Your Financial Life

3 Impacts Of Debt Settlement On Your Financial Life

Generally, agreeing to a debt settlement package with your creditor can negatively affect your credit score. In fact, depending on whether you have previously defaulted on payments you will immediately lose a minimum of 50 points on your credit score. This blemish on your financial record will remain with you for at least 7 years.

When you propose a debt settlement plan to your creditor, you are asking your creditor to accept less payment than what you borrowed. Although, this may help relieve you of your financial obligation to your creditor, the consequences as mentioned above are dire.

It is important to know how to get out of debt without negatively affecting your credit score. It is advised to talk to an accredited credit counselor to get good advice.

3 Impacts Of Debt Settlement On Your Financial Life

Below are 3 effects debt settlement can have on your financial life.

Defaulting and Late Payments

More often than not, by the time you begin contemplating debt settlement, your credit score is already quite damaged due to late payments on your debt.

The defaulted or late payments can drop your credit score by up to 200 points and by no less than 50 points. Even if you manage to pay the debt your credit score report will still reflect the payment as “paid” and not the normal “paid as agreed”.

Paying your debt as agreed will do less harm to your credit score, but it will still leave your credit report tainted for at least 7 years.

Negotiating for Paid in “full status”

If you or the debt settlement company represented by the officer acting on your behalf negotiates for a “paid in full” status with your creditor, this would be a wise thing to do.

However, your creditor is under no obligation to agree to these terms. The creditor will usually agree because they don’t want any more hustle and would rather be done with the arrangement as expeditiously as possible.

Removing an Old Debt Settlement Arrangement from Your Credit Report

Sometimes, after you have paid your full debt as agreed with your creditor, and after 7 years have elapsed, your credit score may still reflect your debt settlement status as not yet updated.

In this case, you need to get this omission corrected. There may be two reasons why your credit score is not updated:

  • Negligence on the part of the credit reporting agency.
  • The lender did not discharge the debt properly.

The best remedy for this is to ask for a credit report six months after you have made full payments in order to verify that everything is ok with your credit score.

Debt settlement may not be an ideal choice for setting your debt, considering that it will damage your credit score. However, if you can get a debt settlement accepted by your creditor, it may be a better option than declaring bankruptcy or having your debt sold to a third party that will demand full payment.

Continue Reading
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Recent Posts

Business4 days ago

How Can Product Owner Develop Stakeholder Management Strategy?

All the organizations require a proper stakeholder management-based strategy so that the goals of the organization can be achieved most...

Tech4 days ago

How To Display A Live Facebook Feed To Your WordPress Website

Around 22% of the global population uses Facebook. Such a large number of user-base suggests that Facebook truly has the...

wordpress-hosting wordpress-hosting
Tech1 week ago

5 Criteria of the Best WordPress Hosting to Know Before Buying

The best WordPress hosting, how to choose it? For many bloggers and website owners, there must be a question that...

Tech1 week ago

Agile BI – All You Would Like To Know

The name says it all. As we talk about one of the most revolutionary approaches in the world of business...

Sports2 weeks ago

Feeling Run Down?

We’re currently living through a difficult time for the world. Many of us are forced to remain indoors, working from...

Lifestyle3 weeks ago

8 Best Ways to Save Money When Shopping

If you want to save money when grocery shopping or each time you make a purchase, then you have to...

Travel Mistakes Travel Mistakes
Travel3 weeks ago

7 Travel Mistakes to Avoid

Traveling abroad requires a lot of planning and research to prepare for a trip abroad. Of course, it’s a wonderful...

Business4 weeks ago

5 Factors to Consider When Choosing Quality Magento Extensions for Your Online Store

It might seem that picking among three thousand available Magneto extensions is a simple and great way to extend your...

Business4 weeks ago

SHOP ELECTRONICS ITIEMS AT HOME COMFORT

Internet shopping can be very common and easily turn out to be a favorite choice for buying, since the items...

Home Improvement1 month ago

6 Simple Ways to Prepare Your Home for House Guests

Whether a family is coming in for the holidays or it is your turn to host this month’s book club...

Marketing1 month ago

How to Properly and Efficiently Optimize Your Website for SEO

In today’s crowded online world, a website that’s not optimized for SEO may as well not exist. Unless a customer...

Home Improvement1 month ago

8 Terrible Home Cleaning Mistakes You Might be Making

Knowing how to clean your home correctly is something that nobody teaches you in the formal education system. If you’re...

Life Hacks1 month ago

7 Things You Can Do To Kill Boredom During A Long Flight

Going on a vacation is one refreshing activity and a fun thing to do. Things get a little difficult when...

Home Improvement1 month ago

5 Bathroom Remodeling Tips You Must Know In 2020

The bathroom is one of the most frequently used places in the house. So, it should be most comfortable as...

Health1 month ago

Data Breaches Can Cost Over $6 Million – Can Hospitals Protect Patient Data?

It’s safe to say at this point that data breaches in the US healthcare system are quite common and are...

Categories

Archives

Trending