Debt Settlements – Is Eliminating Unsecured Debts Worth Getting a Lower Credit Score?

The time is tough on every US citizen because of the current recession of the economy. Almost everyone is facing the financial crisis due to the decreasing job rates and increased prices of everything. When people become embedded in situation like this they think that the only option available is that they should go for is debt settlements. Debts settlements are the ways through which debtors can eliminate their unsecured debts by bringing the creditors to terms of lower re-payment. First of all this is not as easy as it may sound. To do debt settlements with creditors, one need to hire reliable debt relief companies, this deals with the creditors in a professional way and eliminate your unsecured debts up to 60%. Sounds interesting?

Well one thing you should know is that although debt settlements may sound very appealing, they should be considered as a last option on your list of eliminating debts. Because the biggest disadvantage of debt settlements is that they make a very bad impact on your credit score. After you are done with creditors, they immediately report to the credit score bureau and your score get lower to 500 or more. The stain remains on your credit score for a long time and it becomes difficult for you to take a loan, if in case you need it in the future in the situations for like getting a loan for cars, house etc or even renting an apartment. Credit scores are also studied by the employers and so it can affect your job too.

Following are the other options available to eliminate your unsecured debts which you should acknowledge before going for debt settlements:

DEBT CONSOLIDATION: It is a method of taking out a single loan to pay off all the debts. It involves a secured loan against an asset, mostly homes. The debt Consolidation Company pays all your debts with less interest rates and makes you debt free at a faster rate. Having a secured loan on your head will make you pay to the debt consolidation companies every month with minimum payments because if you do not pay on time your asset will be taken.

ACQUIRING LOANS FROM RELATIVES OR FRIENDS: You have a very good choice of burrowing money from your relatives or friends to pay off your unsecured debts and then slowly and easily pay them back without any overdue fees or interest charges.

MAKING A BUDGET AND CUTTING DOWN ON UNNECESSARY EXPENSES: This is the most important thing that everyone should stick to but sadly on one does that. Now to eliminate your unsecured debts you can cut down your unnecessary expenses and save money to pay for the debts in which you are stuck. Other than that, if you are already paying money someone, analyze that if it can wait and pay your debts first.

Source by Matthew Couch

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