All of us aspire to become more comfortable when it comes to living our lives. Enjoying life and having a safe, secure feeling about everything is what every one of us would love to experience. 

How do people do that? For one, they study hard, find a good-paying job, and work hard to save up. Of course, that’s what everyone should always do, as nothing in this world is free. Some people, however, end up borrowing money. Although there’s nothing wrong with borrowing money from a legitimate source, it could get out of hand, if you’re not careful.

Once you have that money, you incur debt. Debt is the amount you owe to your creditor, plus the interest rates you agreed upon. You need to pay your debts on time. As easy as it sounds, there are times when people have difficulty when it comes to paying. Every borrower’s dream is to be finally free from debt. There is nothing more comforting in having financial freedom once more. But what if someone doesn’t have the means to pay a debt completely? 

What is Debt Settlement?

Debt Settlement is an alternative way to eliminate debt by paying a small percentage of what you owe. Although debt settlement is a frowned-upon solution, it certainly helps people who have no way to pay off a debt. To qualify for debt settlement, a person should be able to make monthly payments to a settlement fund. This fund will be used by your creditors to settle your debts with them. He or she should also have exhausted the other means to pay off their debt. 

Ideally, monthly debt settlement payments are lower than regular monthly payments made through credit cards. Opting for debt settlement relieves a bit of financial pressure as you can use the extra money to pay off other debts quickly.  

It may sound like a quick fix solution, but debt settlement should only be considered as a last option. Always weigh in on the risks. If the benefits from risking it outweigh the negative impacts, then go for it. 

Debt Settlement Companies

Having a debt settlement company help you settle your debts can be helpful. If you want to seek their help, you should enroll yourself in the programs these companies offer. Debt settlement companies, especially those who are established in their field, have built solid relationships with numerous lenders. 

These solid relationships with lenders and established debt settlement companies mean that lenders are more open to working with you to settle your debt should you enroll yourself in a debt settlement program. Some companies can handle debts such as medical bills, personal loans, credit card bills, student loans, mortgages, etc.

Do note that each debt settlement company has its own procedures on how they do their thing. Debt settlement company “A” might be accepting clients with car loans, while Debt settlement company “B” might not accept helping clients with car loans. 

Look for a company that works well with your needs. Although it sounds good, debt settlement companies often have fees, and enrollment periods usually take 2-10 years to resolve, depending on the amount of debt a person has.

Installment Loans

Sometimes, things don’t go your way, and you might find yourself in a bit of trouble. You might need an extra hand if you want to pay up your debts. This is where installment loans come into play. 

Installment loans are a type of loan that is paid over a set amount of time. The time and rate can be determined in the contract agreed upon by the borrower and the lender. Another good thing about installment loans is that every “on-time” payment you make goes to the interest and principal owed. 

It also pays. A creditor can see your credit reports and can know how and what are you going to spend that loan for. Although installment loans can be used to pay off debt, always be honest with your lenders on how you would use the money. Lenders understand credit reports, and lying to them will only make your problems worse.

Doing it on your own

If you seem skeptical about enlisting the help of debt settlement companies, then you can do it the hard way. You can do it by yourself. Some banks may offer hardship programs that can help a borrower. These plans are all great, but it will surely depend on a person’s ability to make a reduced monthly payment.

If a bank won’t grant you a loan, then you can try borrowing from family members. Just make sure that you abide by the terms and conditions you agreed upon. For those who want to do it the hard way, they should prepare and educate themselves about a lot of legalities involved in debt settlement. Although it is, by far, the cheapest form of solving your debt solution, it is time-consuming and cumbersome. It’s also riskier if you don’t know what you’re getting into.

Takeaway

A lot of people do want to get out of debt. The feeling of financial freedom is always the best feeling a borrower can have. Debt settlements are often good choices, but it comes with high risks. You can seek the help of debt settlement companies which charge a fee. It’s also longer as most programs last 2-10 years, depending on the amount you owe.

Other alternatives include going for installment loans or going DIY. Whatever route you’re going, please review everything before proceeding. Always make sure that the benefits outweigh the risks. Don’t barge into something that you aren’t sure will help you at all.