Are there any drawbacks to settling a debt?

Yes, there are drawbacks to settling a debt in Arkansas. Although settling a debt can help a person reduce the amount of debt they owe, there is still a significant consequence in doing so. The biggest drawback to settling a debt is the negative effect it can have on a person’s credit score. When a person settles a debt, it often shows up on their credit report as “settled” or “paid in full for less than full balance.” This can cause a person’s credit score to take a significant hit, and that could make it more difficult to get approved for credit in the future. Another drawback to settling a debt is that the debt settlement company often charges a fee for settling the debts. This fee can range anywhere from 10% to 25% of the amount of debt that was settled. This fee essentially wipes out any savings that the person was expecting to get from settling the debt in the first place. Finally, settling a debt does not always mean the debt is completely settled. In some cases, the creditor may choose to pursue legal action against the debtor after the debt has been settled. This could result in the debtor’s wages or bank accounts being garnished or the debt judgment being sent to collections. Therefore, although settling a debt can be beneficial in some cases, it is important to weigh the pros and cons before doing so.

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Are there any drawbacks to settling a debt?

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