How a Lump Sum Versus Payments Works With Debt Settlement
Whether you are looking for a lump sum of money to pay bills or for debt settlement, there are many different choices and the right way to go about choosing the right one depends on the type of debt that you have. A lump sum of cash will not work for credit card debt. Here is a comparison between payments and a lump sum so that you can understand how the process works when it comes to debt settlement.
Lump sum: It’s easy to understand why a lump sum is often used for settling debts. If you are making late payments or do not have any income to support your daily needs, this is usually enough to clear your account. The amount that you receive can be significantly less than the total amount that you owe. If you take into consideration the amount of interest that you would have to pay and the amount of time it would take to pay off your debt, it may be more cost effective to use a lump sum rather than a regular monthly payment. You will not have to worry about taxes and penalties for using a lump sum to settle your debt.
Payments: Payments work similarly but with a difference. Instead of getting one lump sum, you make multiple payments. If your debt is settled over several months, the payments you make can add up to a considerable amount. These payments can then be combined to reach your total debt, although a lump sum is preferred by many creditors.
Interest: One of the biggest differences between a lump sum and payments is interest. Because you will pay the whole amount at one time, you won’t have to worry about accumulating interest charges over time. With the lump sum, you must pay the total amount in full each month, which is very time consuming and is often very inconvenient. With payments, there is no interest to accrue. The amount you pay in one lump sum can be set and is always the same. In fact, you can even spread your payment over several months to minimize the length of the payment.
Legality: When you look at debt settlement, the best option is a good solid company that will not cheat you out of your rights. There are plenty of companies online that claim to help people with debt settlement without giving much thought to how they will actually work with your creditors. They are all too willing to work for a fee and charge you high upfront fees to help you out. Make sure you find a reputable company and they will work to get you the best deal possible.
Debt settlement can be a great choice to reduce or eliminate the amount of your debt. It can work for you if you find the right company who can give you the results that you need and also is trustworthy. When it comes to your debt, make sure that you do your research to find the company that will get you the best settlement possible for your situation.