Debt Relief Pros and Cons – What You Should Know
With so many debt relief options available these days, I wouldn’t be surprised if you confused about what to do. Understanding the pros and cons of debt relief is essential to reducing your debt burden so I have written this short article to give you a bit of guidance. After reading, I hope you’ll be able to chose a suitable solution and finally get on with life in a less stressful manner.
Before we take a look at the relative debt relief pros and cons of debt relief, let me explore briefly what your options are: Debt settlement involves the complete forgiving of a portion of your overall debt and this usually involves some direct involvement with the creditor. This is a good option has it actually reduces the amount you have to repay.
On the other side of the scale, there is debt consolidation which involves the ‘pooling of debt’ under one single repayment plan. This is usually handled by a third party debt consolidation company and you don’t have to do any negotiations with the creditor direct. This option is handy if you are looking to reduce your overall monthly repayments and is by far the most widely chosen form of debt relief.
Being in debt is stressful and counter-productive so naturally anyone who find themselves in this situation wants some way to get out of it. Debt relief comes in many forms but the overall advantage of it is that it reduces debt and as consequence reduces stress.
Your outgoings can be better managed once you have some form of debt relief system in place. Lower monthly payments or in some cases such as debt settlement, you can have entire portions of your debt wiped off your record. Not being saddled with huge payments on say a mortgage can also allow you to build up your credit standing since you are less likely to be behind on payments etc.
The bad news is that debt relief also comes with a few disadvantages. The biggest one is cost. If you chose debt consolidation, there might be a slight premium attached to your monthly payments. Since the debt consolidation company takes over your debt they usually have some sort of service charge.
Another disadvantage is that in the case of debt settlement, there might be negative tax implications. The IRS regards debt write-offs as a taxable benefit and so depending on where you live in the US, there might be a slight tax cost involved with choosing this option.
Overall though, debt relief has more pros than cons. The slight cost of ridding yourself of debt and stress is worth it. And what’s even more important is that in the case of debt consolidation, finding a solution is as easy as clicking your mouse a few times.
There are hundreds of debt consolidation companies online and once you find one you can have an arrangement in place in minutes. I hope this article has made your choices clearer as well as explained debt relief pros and cons.