If you are deeply in debt, you have probably thought about using the services of a debt settlement company but are wondering if it will have any effects on your credit score.
Well the answer is yes, there are effects both good and bad.
These programs are meant to help the debtor along with the creditor.
These programs are much more beneficial to the debtor though.
They can get out of debt by paying a lot less than he owes.
Debt settlement is actually one of the most popular method of debt reduction available.
It has many advantages.
The debtor pays far less than he owes.
The debtor can save anywhere from 40 to 60% of the money he owes.
It is a more convenient choice to get rid of debt.
It is much easier than filing for bankruptcy.
You do not need an attorney; the process is easy and in the end the debtor can have some peace in his life because he no longer has to deal with harassing calls from collection agencies and credit companies.
There are also some not so good effects of debt settlement.
The law states that any debt over $600 when forgiven is subject to tax.
The creditor can put "paid by settlement" on the debtor's credit report.
This can make it difficult to get loans later.
There are also sometimes fees to the settlement company.
Enrolling in a debt program will have a negative effect on your credit report when you first start out.
If your credit rating has already been influenced by you late or missed payments then joining a program and actually paying off the debts will cause your credit score to improve.
Your aim in enrolling in a program besides paying off your debt is to improve or protect your credit score.
You can often request and get a credit company to put "paid as agreed" on your credit report instead of "paid settlement" if you have the company you are working with request it from your creditors.
A debt program paid off properly according to plan can actually improve your credit report in the end.
It takes two to five years to complete one of these programs but it is all worth it in the end.
Well the answer is yes, there are effects both good and bad.
These programs are meant to help the debtor along with the creditor.
These programs are much more beneficial to the debtor though.
They can get out of debt by paying a lot less than he owes.
Debt settlement is actually one of the most popular method of debt reduction available.
It has many advantages.
The debtor pays far less than he owes.
The debtor can save anywhere from 40 to 60% of the money he owes.
It is a more convenient choice to get rid of debt.
It is much easier than filing for bankruptcy.
You do not need an attorney; the process is easy and in the end the debtor can have some peace in his life because he no longer has to deal with harassing calls from collection agencies and credit companies.
There are also some not so good effects of debt settlement.
The law states that any debt over $600 when forgiven is subject to tax.
The creditor can put "paid by settlement" on the debtor's credit report.
This can make it difficult to get loans later.
There are also sometimes fees to the settlement company.
Enrolling in a debt program will have a negative effect on your credit report when you first start out.
If your credit rating has already been influenced by you late or missed payments then joining a program and actually paying off the debts will cause your credit score to improve.
Your aim in enrolling in a program besides paying off your debt is to improve or protect your credit score.
You can often request and get a credit company to put "paid as agreed" on your credit report instead of "paid settlement" if you have the company you are working with request it from your creditors.
A debt program paid off properly according to plan can actually improve your credit report in the end.
It takes two to five years to complete one of these programs but it is all worth it in the end.