Debt settlement with lump sum may help with overdue bills

By Marvin Milner on Jul 27th, 2010

When facing debts that are overdue, some consumers may not be able to make the payments needed to finally get into the black.

As a result, they may consider an option like debt settlement, where consumers negotiate with credit companies to reduce how much they owe. Financial expert Liz Pulliam Weston noted recently that paying a lump sum is probably the best course of action when pursuing this option.

"Don't agree to any payment plan you can't stick with or that precludes you from paying other debts," Pulliam Weston wrote.

However, consumers should be aware of the fact that any debt that isn't paid in full can have an effect on a credit score, making it more difficult to obtain a loan in the future.

Before people get to this point, they may consider debt consolidation through a consumer credit counseling agency. Consolidation can lead to lower interest rates on bills like credit cards. A further option could also be a debt management plan, which can help a person dig themselves out of a financial hole over time.

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