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Debt settlement is one option if you’re struggling to pay down debts. Here are the pros and cons to consider. (Shutterstock)
Debt settlement is when you negotiate with a creditor to pay off a debt for less than you owe. Private, for-profit companies typically offer this service, and it may be an option if you have high debts that you’re unable to pay down.
If you need help paying off debt, consider the pros and cons of debt settlement, as well as some other debt management strategies.
Taking out a debt consolidation loan can be one way to get a handle on your debt payments. Credible makes it easy to see your prequalified personal loan rates from various lenders.
What is debt settlement?
Debt settlement is a type of debt payoff strategy that works like this: A company charges you a fee to negotiate a settlement amount with your creditor — a lump-sum payment you agree to make in order to have the debt wiped clean. This amount is typically less than your outstanding balance.
With debt settlement, you’ll usually need to start depositing money into a designated escrow account each month. Once your balance in that account reaches a certain threshold, the company will reach…
