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Bucci: Debt settlement could hurt a consumer's credit score
01/27/2010
When dealing with difficulties in credit card debt, some consumers may consider debt settlement as an option.
However, a recent piece from Bankrate.com's Steve Bucci noted that debt settlement could end up hurting a consumer even more than their current situation is. Settling would probably end up hurting a person's credit score, which will make it more difficult for them to get a loan in the future.
Furthermore, the methods that debt settlement companies use may not work anyway. Bucci said that creditors are going to want a lump sum of 60 percent of what a person owes, which often isn't possible for people who are already having trouble trying to pay off debt.
That, and creditors are going to try to get their money, whether it be through many phone calls or using lawyers.
"The more time that passes, the more aggressive you can expect the collection attempts to become," Bucci said. "Creditors do not settle quietly."
Rather than going for debt settlement, consumers may consider other options, including consulting with a consumer credit counseling service, which may give people other ways for dealing with debt. Those could include better budgeting techniques or debt consolidation.
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