Consumer Debt Settlement Negotiation – Any Associated Risk?

July 13, 2010 - PRLog -- Many people want to be free of their crushing consumer driven monetary responsibilities but they do not see a method of doing such because of how much money they currently owe.

Aurora Lillo Editor of the "Best Debt Relief Programs" website -- http://www.BestDebtReliefPrograms.net -- pointed out;


“...Without the knowledge inherently necessary to actively reduce or remove their financial solvency issues on their own they often turn to people that are touted as being professional debt counselors and lenders. One of the primary tools of these services is negotiation of consumer debt with the original creditor...”  

Settling and negotiating debts is one of the primary methods of freeing an individual from financial burdens. However, there can be negative consequences to consumer debt settlement negotiations. These risks are far outweighed by the benefits of such a practice, but they do exist. One of the major risks is that it can actually reflect negatively on an individual's credit report when settlements take place. This is because the original creditor is not being paid what they are contractually owed in full. They are agreeing to take less money than is theirs by right simply so they can get some of what they are entitled to.

Settling older unpaid balances can actually lower a credit score once the debts are all paid off if those accounts are closed afterward. It is considered far better to leave the oldest debts on a credit report and pay them off on a timely basis to build credit. When outstanding balances are paid in full and an account is closed it can no longer contribute to a positive credit score. Newer unpaid balances can be closed with little issue but the savvy individual will pay off their older debts in the original manner of monthly payments if they are able to do so.

“...Outside of the risk of a slight negative credit hit for settling on a lower payment amount there are really no down sides to such financial activities. If this settling of unpaid balances is combined with a consolidation loan then all of the previous debits on the individual's account can be paid in full, if they choose. This will allow them to only have to pay one low monthly payment. These payments will easily repair any minor credit score damage closing all of those accounts might have brought about. The best part is that those creditors will no longer call the individual or harass them through the mail. Settling unpaid accounts is always a good idea...” added A. Lillo.

Further Information By Visiting; http://www.BestDebtReliefPrograms.net