Pros and cons of do it yourself debt settlement
Debt settlement helps you to pay off your debts when you are in financial problem. Debt settlement lowers the outstanding debt amount. This lowers the debt amount generally by 40-60%. So, it becomes quite easier for you to make the payments. You can try do-it yourself (DIY) debt settlement to lower your outstanding debt amount.
DIY debt settlement pros and cons
Debt settlement helps you lower the outstanding debt amount. However, it is both beneficial and disadvantageous for you.
Some of the pros:
- You are able to eliminate debt more easily
- Through do it yourself debt settlement you are able to save the expense of paying the debt settlement companies
- Your credit report shows that the debt was discharged and not unpaid thus you may see some improvement in your credit rating.
- You get financially wiser and it is less likely that you will make this mistake again.
- As you are able to pay off your debts you are able to avoid a lawsuit or even filing bankruptcy and are saved from the additional emotional turmoil and costs of bankruptcy.
- Even if you are required to file bankruptcy due to may be increased financial problems, the do it yourself debt settlement will atleast show that you had tried your best to handle the problem.
Some of the cons:
- Though your credit report reflects that you have paid the debt, it also reflects that you have paid the debt on altered terms.
- Credit companies are unlikely to settle debts on which you are current. The very fact that you have been able to make the payments till now, that you have not missed payments creates sense that you are still in a position to make the payments. Thus, you will have to miss payments in order to settle your debts. But this hurts your credit score.
- In DIY settlement is also possible that you may not be able to negotiate a lower interest rate as a professional may have. A professional has better knowledge in handling such cases.
- People opting for do it yourself debt settlement are more likely to commit mistakes such as failing to get a written debt settlement agreement so that a negotiated debt that’s paid off in full discharges the debt fully in the eyes of the creditor. If you don’t have a signed document, they creditor may even turn the debt over to a collection agency.
Thus, you will have to determine whether or not you want to go for a DIY debt settlement by comparing the pros and cons of the method.