Legal Debt Settlement
Legal debt settlements are a means for you to re-negotiate your current loan agreement terms with your creditors through a legal debt settlement company. If you are worried about your debts and your financial struggle seems to be getting worse, you may want to consider a legal debt settlement.
When researching companies that provide legal debt settlements, be sure that you understand exactly what they can and cannot do. While the notion of "settling" your debts may sound like a relief, it does not come without a price. Companies that offer legal debt settlements cannot erase your debt nor can they pay your debts for you. (Beware of anyone who makes the process the sound as simple and inconsequential as waving a magic wand.)
Also, before signing on with a legal debt settlement company, be sure you understand what your responsibilities are. Many agencies require that you stop using any and all credit immediately. This helps to ensure that you will not continue overspending and tells your creditors that you really are trying to change your bad spending habits. Representatives of legal debt settlements may also offer to teach you budgeting and money management workshops. This, of course, is a great idea. After all, it won't do you much good to settle all of your current debts only to rack up new ones a little while later. The big picture should be to use a legal debt settlement to help you get out of debt, spend your money wisely, and save for the future.
For many people a legal debt settlement is an excellent alternative to bankruptcy. However, a legal debt settlement can hurt your credit rating. There is some controversy on this point. Some experts say that potential lenders view legal debt settlements negatively. You didn't pay as you originally agreed to pay and that means you are a high credit risk. For these lenders you can expect to pay higher interest rates if you are approved at all. Other experts believe that lenders see legal debt settlements more positively. You are trying to pay your debts as best you can, you did not file for bankruptcy, and (hopefully) your spending habits have changed for the better. Either way, know that going through a legal debt settlement will be on your credit report.