Debt Settlement has some fundamental risks that come with the decision to pursue efforts of settling debt for a discounted price with your creditors.
This article provides an outline of three existing debt settlement risk.
3 Financial Risks
No Guarantee
- There is never a guarantee that you will be able to settle debt with a lender. Just because you want to settle and make an offer does not mean that they will take it.
- You will most likely have to pay taxes on any debt forgiven by your lender.
- The government and the IRS count those funds as income. So you will get a 1099 for the discounted amount of debt in most cases.
- Your credit score is not going to be in good shape. there is no doubt that you will have to become delinquent in order to have any real chance of settling any debt with your lenders. Those missed payments and default statuses go on your credit history and payment history records.
- Also just because you settle a debt successfully does not mean that other potential creditors are going to view that as a good thing. Think about it. You borrowed money and did not pay the full amount back.
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I am glad you were able to find the professional debt help you needed to overcome your financial hardships and get out of debt. Thanks for sharing.
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