Although many people consider that debt settlement is the best financial option to assist debtors to become debt free, there are many things you should consider before taking up this debt relief plan.
Be frank, many people miss this important step when they decide to go for debt negotiation. They don't take a look at their credit reports. It is absolutely wrong if you start settling your debt without knowing your exact credit score. You need to request the latest copy of your credit report from the credit bureau. Find out your credit rating first before signing up a debt relief plan. If you already have a very bad credit, you must not undergo debt settlement because it will make your credit rating worse. You should look for other option, i.e. obtaining bad credit debt consolidation loan to pay off your debt.
Secondly, do you really assess your current financial ability? Settling debt doesn't mean that you don't need to pay back your debt. You still need to make the repayment by paying a lesser amount. Hence, you are reminded to get ready a sum of fund to settle your outstanding balances. If you don't get the fund ready, once your creditors agree with your settlement proposal, how can you make the payment? If you don't have sufficient money to do so, you are advised to look for friendly loan from your family members or friends before writing a settlement letter to your creditors.
Thirdly, you should consider other debt repair alternatives before finalizing your decision. You need to weigh all the pros and cons of different financial solutions based on your financial needs. Don't just settle your debt blindly because this financial option brings negative impact on your credit. Do thorough comparisons to see whether debt counseling program or debt consolidation plan can work better than debt negotiation.
The process of becoming debt free is quite challenging. Hence, you need to think carefully before taking any action.
