Settling debt is not easy and it often causes a lot of stress. If you do need to settle your debt, it is better to use a debt settlement firm that will do it in such a way that it will not affect your credit score.
Debt Settling Firms
You can settle your debt through debt management or settling companies, but they all have different ways of going about it.
Debt management companies are created by banks and they also need to get their money back and reduce their losses. Therefore, a debt management company will arrange with the creditors to lower interest rates; and an affordable debt repayment plan will be followed to ensure that the debt will eventually be settled.
Debt settlement firms ask you not to pay your debt for a certain period of time so that they can convince the creditors to accept a lower amount rather than getting nothing.
Debt termination companies promise that they can wipe out the debt through legal means. This is very seldom successful and it is wise to stay away from this type of settlement.
No matter what way you choose, it will affect your credit score. But using a debt management and loan modification mitigation will have less impact on your credit score. And if you use the debt settlement way of not paying for a period of time, it will have the maximum impact on your credit score.
Finally, debt management will have less effect on your credit score and with debt settlement, you could have a situation where your credit rating would be affected badly and the creditors might not bend to the consultant’s demands. There are loan modification companies that can give you the best advice, like loanmoddepot.com.