Stephen Martin's Page

Debt settlement is a process where a negotiation is made to reduce the amount owed on a debt. It can be accomplished either by the consumer negotiating on the debt, or a service can be hired to have professionals negotiate on behalf of the consumer.



The benefits of enrolling into a debt settlement program are pretty strait forward. The savings is the biggest benefit, in many cases the debt can be cut in half. Which naturally decreases the time someone will be stuck in debt. Most of the time people can expect to be debt free within two years or less.



There are however some drawbacks to settlement. For one a creditor will never offer a settlement on a debt when the consumer has a current payment status on the account. You must fall behind and show financial hardship for any creditor to be willing to accept a settlement. So during the beginning of the process when falling behind on the bills your credit score will go down. However the damage done to the credit report is not permanent nor public, like a bankruptcy which is a public record and can show up on a credit report for up to ten years. And once the debt have been settled and no more outstanding debt balances are showing on the credit report, the credit score will start to go back up.



Debt settlement is much better suited for people who have higher debt amounts like $10,000 or more and who are having a legitimate struggle to keep up with the minimums. Or for people who are sick and tired of paying extremely high interest and realize they will be stuck paying these bills for decades while losing possibly tens of thousands over the course of time.