NEW YORK, Feb. 25, 2016 /PRNewswire/ -- In a newly released article, Allstate Debt Consolidation explains the benefits and drawbacks to going with debt settlement to pay off credit card debt and other types of debts.
Getting rid of debt is crucial to anyone's financial health, as well as their future. Being debt-free allows people to enjoy life again and it lets them make financial decisions without worrying about getting hounded by creditors every month.
It also helps them start saving for retirement, or their kid's education, or any other important event that they may need to plan for down the road.
But what happens when people can't reduce debt on their own? And what happens when, because of their poor credit score, they are unable to qualify for traditional solutions such as consolidation loans?
That's when debt settlement becomes a viable option. It's for people who don't have the best credit and who don't want to consider bankruptcy.
Settlement programs are a strategy in which consumers hire another company to negotiate with creditors on the consumer's behalf. If the settlement company is successful, the consumer's total debt will be less than what they currently owe.
How much less?
That depends on how much debt the creditor is willing to forgive. The newly released article from Allstate Debt Consolidation breaks down the pros and cons of selecting a service provider for this solution.
The article explains how to choose a debt settlement company, including how hard it can be to find the right firm. Many of the firms have come under scrutiny from the government and other consumer groups.
The article shows consumers which debt settlement companies to stay away from and which ones have a good reputation within the industry.
According to Jack Dominico, company rep, the aim of a settlement program is to have creditors agree to a reduced amount and once this lower amount is negotiated, the debtor is then better able to make the remaining monthly payments. The settlement firm negotiates this deal with a person's creditors.
It's important that creditors see the value and understand that this will be the best option for them as well. It's always easy to see the value for a debtor, but for creditors it has to be proven that this is the best way to solve the issue and not have it linger on for several years. Once the debt settlement company is able to show the creditor that this is the best path to take for both parties involved, they are more likely to agree to the terms.
The right company can help creditors see the benefits.
This type of program works best when a debtor has an experienced advocate representing them, someone who knows how creditors think and what their goals are. By hiring a quality debt settlement agency, a person is more likely to have their creditors agree to new terms and less money. And the article shows consumers how to go about finding the right firm.
A settlement agency has experience working with creditors to make these deals and they know how to frame the situation in a way that makes sense to creditors and helps them see the value.