Ronnica Rothe is a graduate with honors from the University of Oklahoma and a current student at Southeastern Baptist Theological Seminary. She works with Personal Financial Network (pfni.net) to help individuals get out of debt and reach their financial goals.
If you watch enough late night television, you will see advertisements for several different types of debt help products. Some will promise to eliminate your debt immediately or promise something that sounds too good to be true. It is important to understand exactly what is being offered by whichever agency you decide to use to handle your debt.
Many of those late night ads are offering debt settlement. Debt settlement is when the company convinces your creditors to accept a one-time payment of a lower value to settle your debt with them. Often times this can be much lower than the actual amount owed because they are willing to take whatever you will give them. However, you must be in a pretty desperate situation for the company to even consider this. There are also downfalls of debt settlement that should be adequately considered before deciding to settle with your creditors.
Debt settlement can be damaging to your a>. Future creditors do not like to see that you were unable to pay off your debts in the past. In most cases, debt settlement is too extreme an action for the debt accrued.
A milder and more beneficial form of credit card debt relief is a debt management plan. These plans allow you to pay off your creditors at a comfortable but disciplined rate. They work for many people because they lower the interest you owe on your debt, allowing you to pay it off more quickly. In many cases you can pay off your debt in three to five years.
Credit card debt settlement can seem very attractive, but like with any financial decision, make sure your fully understand it before going through with it.
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