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Debt Relief – Insolvency – Bankruptcy Information » Insolvency » Debt Settlement Services – Pros and Cons of Getting Debt Settlements

Debt Settlement Services – Pros and Cons of Getting Debt Settlements

Article by Erik stump

The process of settling debt is when a process of arbitration is held between the debtor and the lender and a lower payoff is agreed upon by the lender. Settlement services are taken into account when the customer cannot pay off the creditors and bring his debt to current status. The customer under such cases needs professional advice and counselling.

There are benefits and consequences which people should think before the go ahead and settle their debts.

1. Settlement helps the customer to put down his overall debt bill. The amount as well as the over all rate of interest is arbitrated and is reworked so that it becomes easy for the customer to pay back the debt.

2. This effort helps the customer to put down his overall debt bill which saves a good amount of money for the customer.

3. By paying back in full the customer can gets a good credit rating. The improved credit report helps the customer to come back to the credit market.

4. Any negative report if made by any creditor gets eradicated by making regular payment to the creditors.

The Consequences of getting a debt settled are:

1. The credit report of the customer shows the fact that the debt has been settled and the customer has paid the bill less than the original amount.

2. The customer needs to be pro active in getting a statement from the debtor which states the fact that the customer does not owe any amount to the creditor. If this is not done the chances are there that the customer might sell the rest of the debt to another agency. The customer in that case would start receiving collection calls as before for the rest of the amount.

3. Any money saved during the process of collection is treated as income and is liable for taxation. The collection agencies following up with the customer need to file a 1099C form which to the Internal Revenue Service and any money saved above $ 600 is liable to get taxed.

Settlement is a measure of debt relief which needs to be used effectively for the benefit of the customer. The customer needs to be very conscious about his decision as it can be a costly mistake.

It would be wise to not go directly to a debt settlement company but rather first visit a debt relief network. The top debt relief networks only allow debt settlement companies into their accredited organizations that prove a track record of successfully negotiating debts and have also been certified. They are free to use and offer helpful debt relief advice.

Free Debt Advice

FreeDebtSettlementSolutions is a matchmaker in the debt settlement industry. They have paired up thousands of consumers up with debt settlement companies who are most likely to get consumers the best deal.

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