Debt Settlement Pro or Con
So where do you stand in the debate regarding debt settlement? Are you a critic with the attitude that debt settlement is nothing more than a scam or even possibly a road to total financial ruination including increased tax liabilities and ruined credit scores? Or, are you a supporter of this strategy with the idea that it’s a good or even possibly the best option for debtors who can’t meet their bills month in and month out?
In reality there is merit on both sides of this argument. It really depends on an individual’s specific circumstance. Whether this strategy for handling crushing debt loads will have benefits that outweigh costs will depend on a number of factors to be considered very carefully.
If you need to get your debt problems solved because you consider them severe and you are considering all available options – including bankruptcy – ask yourself these questions:
Do you bounce checks or worry constantly about bouncing checks?
Is a majority of your debt problems associated with credit card debts?
- Are you paying one bill at the “expense” of another because there is not enough to pay all bills that come due?
- If you did not have credit card debt could you pay your bills then have enough left over to build your savings account?
- Have you been advised by legal counsel that your assets are too substantial to consider filing for bankruptcy?
- Have you “ruled out” bankruptcy for one reason or another even if you could file?
If you have answered affirmative to these questions, are evaluating various debt reduction strategies and perhaps are confused by all the “expert” debt advice out there…especially on the internet, then you should not rule out debt settlement strategies until you have conducted a rigorous vetting process. Don’t eliminate something that could be just the right ticket to eliminate your debt nightmare.
When bankruptcy is just not an option but debt is ruining your financial life, debt settlement done correctly with the right advice and help, can put you back on the road to financial health. However, there are many other factors to consider other than just the bankruptcy question before deciding that debt settlement will net out more benefits than cost in your particular financial situation.
Fortunately you have many options to choose from when dealing with a debt burden. However, make a decision that is well informed and spend enough time evaluating each available option before choosing the one that will best fit your current and future financial goals!
Debt Settlement Expectations
It never fails to amaze me to hear critics of debt settlement warning those who find themselves looking at this type of debt help that they may be dealing with a tax liability resulting from canceled debt. Still funnier are the dire warnings about the effect that debt settlement is going to have on your credit scores.
Why do I find this amusing? Well, apparently all these so-called “experts” never have experienced a predicament where they are required to choose between bankruptcy, debt consolidation, debt settlement or consumer credit counseling. Anytime you’re going to be faced with hard financial choices, and you cannot make ends meet, the very last thing you should be worried about is your credit score. Rather, it is time to find a solution to put your personal debt and nights without sleep behind you.
Negative Feedback
If you’re considering debt settlement, but have often heard plenty of terrible feedback its possible you have some legitimate fears. That being said, please keep in mind your worries pertaining to debt settlement really should lie strictly in the area of certain debt settlement companies out there who want merely to take your hard earned money and supply virtually no assistance. This ought to be your number one worry, not your credit score or tax liability.
What’ The Big Deal?
Are you going to end up with a tax bill liability if you should decide to seek out relief by way of debt settlement? You may or may not. Creditors will have to report all terminated debt above the amount of $600 to the IRS, and you will be required to report this canceled debt as income, and will likely be provided with a Form 1099 coming from each and every creditor from whom you have received relief in the form of debt settlement. Remember, on the other hand, that an “insolvency” regulation is available for people that are deemed to be insolvent at the time they settle their debts. This means that if your liabilities exceed your current assets at the time of each settlement deal agreed to with your creditors you’re considered insolvent and will not likely take on a tax liability. I strongly recommend that you consult with a knowledgeable tax advisor to ascertain where you stand pertaining to the insolvency guideline. Even if you’re faced with a tax liability, what is the big deal? Owing taxes because of debt settlement is in fact because you realized a cost savings, and no doubt you are going to be much further ahead than your have been if you would have stayed 1000s of dollars in debt, barely keeping your head above water each month.
Concerning your credit score, again, I do not quite see why this would be an issue. You are in financial trouble, you’re losing sleep and you also really don’t see how you’ll get it done from one month to the next. So why worry about your credit score? One of the major perks of excellent credit is usually to obtain much more credit? I do think you will totally agree that you almost certainly don’t want or need to have any further credit at this particular time. Decide to put your debt behind you and then you should get started making plans for your credit score. Whatever the case, the impact on your credit score as a result of debt settlement should be short lived, and the majority of people see a much improved score within just 6-9 months of concluding a debt settlement program.