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

packers and movers packers and movers
Home Improvement1 day ago

Tips to choose packers and movers to help move your office space

Numerous moving companies in India help make your move to any city as smooth as possible. They offer quality and...

Health2 days ago

Enjoy Responsibly: The Safest Methods for Using Cannabis

As cannabis is becoming more and more legalized across the nation, people are becoming more curious about its uses. With...

moving services in Toronto moving services in Toronto
Home Improvement2 days ago

Tips on finding moving companies in Toronto providing comfortable moving services

Moving to an interstate location shall be stressful, especially if you are about to relocate on your own. Hiring professional...

Autos6 days ago

Choosing the Right Tail Lights for Your Car or Bike

If you need new tail lights for your car or bike, you’ll want to take several factors into consideration so...

End of lease cleaning in Melbourne End of lease cleaning in Melbourne
Home Improvement6 days ago

End of lease cleaning in Melbourne – Move in and Move out easily

If you are a tenant, you are sure to be aware of the fact that you get to move into...

team in Sydney team in Sydney
Lifestyle6 days ago

Tips in finding a trustworthy removalists team in Sydney

Relocating to a newly rented or leased house space can be a tedious and time-consuming process to perform on your...

Lifestyle1 week ago

4 Fashion Additions to Complete Your Outfit

A wonderful outfit can make you appear and feel like someone who can conquer the world without even breaking a...

Autos1 week ago

How to Go about Selling an Old Car for Parts

Selling an old car for parts is easier than most people realize, and your junker could be worth quite a...

Business2 weeks ago

4 Things to Consider Before Choosing a Feed Tank for Your Manufacturing

In every day manufacturing you may find that you need a feed tank for your operation. Selecting the right feed...

Tech3 weeks ago

How to Find a Phone that Fits your Needs

Are you looking to buy a phone that may suit your needs without poking a hole in your wallet? You...

Lifestyle3 weeks ago

Elegant Dinner: 4 Ways to Fancify Your Next Get-Together

Throwing a social gathering in the comfort of your own home can be a joy. If you want your upcoming...

Autos3 weeks ago

5 Issues You May Face in the Aftermath of an Auto Accident

Being involved in a motor vehicle accident is something we all would like to avoid. However, no matter how safe...

Business3 weeks ago

5 Ways Guest Posting Can Help Grow Your Online Audience

Guest blogging is the process of posting your original content on someone else’s website. This might seem like a counterproductive...

Home Improvement3 weeks ago

4 Important Ways You Can Update Your Decades-Old Home

Modernizing an older house doesn’t need to be a time-consuming or expensive process. With a few simple upgrades and a...

General4 weeks ago

3 Ways to Strive Toward Better Sexual Health

September is World Sexual Health Month! A critical part of our overall well-being is sexual health. This month is the...

Categories

Archives

Trending