Debt settlement can be the best option if you are financially afflicted with heavy debts. This is far better than filing for bankruptcy because doing so can cause long lasting negative effects on your credit rating. Yet, it is necessary to know the pros and cons of settling credit card debt so that you can make an informed decision. Basically, debt settlement is both ethical and legal and considered to be a fast way to get out of debt. Typically, the whole payment process takes 2-4 years depending on your ability to come up with the money. Some programs may last up to 5 years depending on the situation. Another advantage of settlement is that you only pay a portion of your entire debt unlike in other methods like consolidation. Plus, there is no court involvement, and your record is not be publicized like with bankruptcy. Although your credit rating can be affected, re-building it can take sooner compared to other methods.
On the other hand, debt settlement also poses some disadvantages. Essentially, you must expect that you will receive collection phone calls as part of the process. Also, taking debt settlement as an option can affect your credit score in a negative way. And the worst part is you can get sued if the situation calls for it. However, this costs a lot of money that is why creditors consider this as the last resort. Lastly, only medical bills, credit card debts and all types of unsecured debt qualify for the program. Therefore it is best to weigh the pros and cons of debt management plans before signing on the dotted line.