It might seem like a good way to cut off your debt problems, your debts are reduced the pressure is gone and you have more money to spend.

Right, but did anyone tell you the effect debt settlement will have on your credit score Read on to learn the consequences lebron 10 shoes.You might have been told that debt settlement is the simple process of negotiating with your creditors for a reduction of your debts.

You contact a debt settlement company; give them the names of the creditors and the amount you owe cheap nike heels. The company discusses with your creditors, get your debts reduced and you are left with a lower monthly payment which you pay through the debt settlement company.

Sounds real fine but that's not the full story cheap air jordan 11.It takes time for the debt settlement company to negotiate with your creditors.

During this period, you will stop payments and this will appear on your credit report. The creditor will update your credit report to reflect that you have paid the account and also include that you paid less than the amount that was initially agreed. This report has a negative effect on your future credit applications.The first 1-3 payments you make goes into the settlement company's pocket for fees causing further delay. Also when your creditors agree to write off a percentage of your debt you might not be able to pay the difference at once. The debt settlement company collects money from you monthly until the balance is reached. At that time, the settlement company would pay off the credit card. All this period you are not making payments and it appears on your credit report.Late and missed payments are reported to the credit bureaus, your credit score drops, and you might start receiving collection calls. The negative remarks will remain on your credit report for up to seven years. You will have difficulty getting credit at favorable terms until you have new positive information on you report. It can also affect your chances of employment. Also forgiven debt is treated by the IRS as income and you have to pay tax on it.Settled debt is recorded as "Charged-Off Settled" Or "Paid-Settled. Paid is one of best account listings that you can receive after a debt settlement. It has a neutral effect on your credit report or score. But if accompanied by other information such as Paid Repossession or Collection, it will have negative affects.This is how to make debt settlement work for you.