Will Debt Settlement Damage My Credit Score?
Posted: Tuesday, June 01, 2010
by Jackson Roberts
Consumers frequently express concern about the potential impact that a debt settlement program can have on their credit score. This is an understandable concern, but it needs to be considered carefully to understand the bigger picture of how it fits in to your overall financial condition. The reason for this caution is that too many consumers have avoided debt settlement because they wouldn’t consider any debt solution that could damage their credit, even temporarily. But by doing so they left themselves vulnerable to total financial collapse under the weight of their debt, and many ended up suffering the credit score damage anyway that they sought to avoid. The crucial difference for them is that they had no part in a debt solution, yet they experienced damage to their credit just the same. And the credit damage they suffered was usually much longer lasting than if they had done debt settlement because their debt problem still persisted, rather than having being resolved.
John has some large balances with high interest rates on his credit cards, and he is only able to make the minimum monthly payments on his accounts. He used a debt calculator to analyze his unsecured debt and discovered that, at his present pace, it would take him nearly 25 years to pay off his balances. He researched possible debt solutions, knowing that it wasn’t realistic for him to believe that he would be able to free himself from his debt. A debt settlement program offered the benefits he badly needed to become debt-free, but he rejected the idea because he wouldn’t consider any damage to his credit. You see, John had never been late with a payment in his life; he had always made that his highest priority. A few years later and still without a viable debt solution, John’s finances finally reached the breaking point and he had no other option than to start making late payments. In comparison, had he enrolled in the debt settlement program at the time he did his debt research, his debts would have been nearly paid-off and he would have had more money each month while he was in the program.
If this scenario sounds similar to the situation you’re facing right now, then getting in contact with professional debt counselors can help you decide if debt settlement may be the right solution for you. They can assess your debt situation and recommend the appropriate credit card debt relief program for you.
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Top-level comments on this article: (1 total)This is such good advice. We're so addicted to credit that it's become a kind of security in our heads which makes it so hard for us to deal with debt realistically. Thanks for your sensible article.
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