Debt Relief Consequences for Your Credit Score

Sometimes in life, there are moments when you cannot pay off your debts on your own, no matter what you do. Fortunately, modern Debt Stop services help people deal with overwhelming duties and offer convenient plans and strategies. If you are ready to seek help from such specialists, study what consequences it may have on your credit history.

Debt Relief Plans

There is no one-size-fits-all solution that suits every client. That is why companies develop plans to alleviate the financial burden on a case-by-case basis. Among these methods are the following:

• Debt settlement. In the course of negotiations, lending institutions usually agree to forgive the borrower for the debt part.
• Debt management provides a review of the payment plan and terms to help you better control your finances.
• Debt consolidation. As part of this strategy, all existing debts are combined into one. In the long run, you will be able to save on interest.
• Bankruptcy. If your debt situation is complicated, you can declare yourself bankrupt through court. As a result, this procedure can reduce or completely save you from part of the debts.

The professionals who deal with your issue should carefully check your documents and history to find a solution that does not harm you even more in the future.

Debt Relief Consequences

Do not think that by using a debt relief program, you will irreversibly ruin your credit history. Typically, when you can’t pay off your debts, your score isn’t perfect anymore. Choosing the right plan that will ease your financial burden will be the best decision. However, each of the listed strategies has its pros and cons.

Debt settlement

Usually, debt settlement is ranked one of the first in terms of the potential harm to your credit history. Typically, payments are suspended when negotiations are underway between the lender and the firm settling your debts. It means your credit score goes down when you miss one or more scheduled payments.

Debt management

This option is a much softer solution to the debt issue. In this case, you do not refuse payments but only revise the conditions. The debt management program will not negatively affect your score as long as you make the agreed payments on time.

Debt consolidation

The impact of this strategy directly depends on your actions. If you request another loan to pay off after combining all debts into a single payment, it will trigger an in-depth investigation by the new lender. Also, you should not skip regular payments and not take on new debts until you resolve the issue with those that already exist.

Bankruptcy

Bankruptcy has a long-term impact on your credit score (over 7-10 years, depending on the case). It can lower your chances of getting new credit, holding certain jobs, renting an apartment, or increase car insurance in the future.

Choose Reliable Debt Relief Company

The inability to pay off debts is a difficult situation both from a financial and psychological point of view. Choose a reliable company that will carefully analyze your history and pick the optimal action plan to minimize possible consequences.