Debt settlement is a debt relief option that can help consumers struggling with high levels of debt. While it can be an effective way to manage debt, there are both advantages and disadvantages to consider before pursuing this option. In this blog post, we will explore both the pros and cons of debt settlement in Pennsylvania.
Pros of Debt Settlement in Pennsylvania
1. Debt Settlement Can Help You Save Money
One of the primary benefits of debt settlement is that it can help you save money on your outstanding debts. When you work with a reputable debt relief law firm like SPENT Debt Relief, they will negotiate with your creditors on your behalf to settle your debts for less than what you owe. This can result in significant savings on your total debt.
2. Debt Settlement Can Provide Relief from Harassment
When you’re struggling to keep up with your bills, creditors and debt collectors may bombard you with phone calls and letters demanding payment. Debt settlement can provide relief from this harassment. When you work with a debt settlement company, they will handle all communication with your creditors, and you’ll stop making payments to your creditors altogether while the negotiation process is ongoing. If a creditor is harassing you, know your rights under The Fair Debt Collection Practices Act (FDCPA) and contact SPENT Law Group if you believe your rights are being violated.
3. Debt Settlement Can Be a Faster Process than Bankruptcy
While bankruptcy can take several years to complete, debt settlement can often be completed within a few months to a year. This can be beneficial if you’re looking for a quick resolution to your debt problems.
4. Debt Settlement Can Be Less Damaging to Your Credit Score than Bankruptcy
While both debt settlement and bankruptcy can have a negative impact on your credit score, debt settlement may be less damaging in the long run. When you settle a debt for less than what you owe, it will be marked as “settled” on your credit report. This notation will remain on your credit report for up to seven years from the date of the first delinquency that led to the debt settlement. This is a shorter period than the 10 years that bankruptcy can remain on your credit report.
Cons of Debt Settlement in Pennsylvania
1. Debt Settlement Can Be Expensive
Debt settlement companies typically charge a fee for their services, which can be a percentage of the total amount of debt you owe. This can add up quickly, and you may end up paying more in fees than you save through the settlement process. SPENT Debt Relief is committed to helping consumers pay less overall. We charge a lower fee than our competitors because we believe our clients have SPENT enough.
2. Debt Settlement Can Damage Your Credit Score
As mentioned above, debt settlement can have a negative impact on your credit score. When you settle a debt for less than what you owe, it will be marked as “settled” on your credit report. This notation can lower your credit score, making it more difficult to obtain credit in the future.
3. Debt Settlement May Not Be Successful
Not all creditors are willing to settle debts, and debt settlement may not be successful in every case. If your creditors are not willing to negotiate, debt settlement may not be a viable option for you.
Debt settlement can be an effective way to manage debt, but it’s important to weigh the pros and cons carefully before making a decision. If you’re still not sure, compare all of your debt relief options here. Working with a reputable debt relief law firm like SPENT Debt Relief can help you save money, provide relief from creditor harassment, and provide a faster resolution to your debt problems. It’s important to consider all of these factors and consult with a financial professional before deciding whether debt settlement is the right option for you.