Process of Loan/Debt Settlement
- The very first visible advantage of debt settlement is this debt would go invisible from your creditors list, thus, helping you to plan your monthly budget and giving you scope for other settlements.
- If it’s a debt that held a big proportion of your debt then obviously you will be able to buy some peace of mind once you have settled that debt.
- The monthly payments will witness a fall as the debt settlement program would erase the interests and fees accrued on the outstanding amount.
- Over limit fees would also go down once you join the debt settlement program.
- It becomes quite obvious that if you opt for a debt settlement your credit score is sure to witness a fall. You should note that all such loan/debt settlements are reported by banks and financial institutions to CIBIL and other credit rating agencies, which, in turn, calculate your credit score keeping in mind this or any other such settlements. This has a very bad impact on your credit score. There are high chances that your application for any kind of loan or credit card may get rejected in future as you are considered less trustworthy in terms of loan repayment.
- While your debts get reduced by way of debt settlement, the balance that is waived off reflects in the income side of your balance sheet thus leading you to paying taxes on the amount.
- Make sure you have enough funds to meet the settlement amount requirement. Your negotiations and settlement offer would go a waste if you default in your payments.