What are the risks of debt settlement?

Debt settlement is a form of credit card dispute resolution in which a consumer negotiates with creditors to reduce the amount of debt they owe. While it may seem like a great way to reduce debt and save money in the short term, it can come with some risks. The first risk of debt settlement is that it can have a negative impact on a person’s credit score. Since debt settlement involves the consumer not paying the full amount of what they owe, it should be noted that it will often hurt their credit score. This can make it more difficult to obtain credit in the future, and can result in higher interest rates. Additionally, creditors may report the debt settlement to the credit bureaus and this can remain on a person’s credit report for 7 years. This can further impact their credit score and make it difficult to get credit in the future. Another risk of debt settlement is that it can be very expensive. A consumer will often have to pay a large fee to the company handling their debt negotiation. This fee can be quite high and the consumer should be aware of this before entering into any agreement. Finally, it is important to note that debt settlement does not always work. Creditors may not accept the offer, the consumer may realize that they cannot afford the amount agreed upon, or the process may take longer than expected. In summary, while debt settlement is a viable option for credit card dispute resolution in Florida, there are also risks associated with this process. A consumer should research these risks and be aware of them before entering into any agreement.

What are the risks of debt settlement?

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