Loan settlement is a much-debated debt relief solution, but there are many myths surrounding it. Some people are afraid that it will destroy their credit for life, while others think it’s a quick solution to get rid of debt. To make the right financial choices, it’s important to distinguish fact from fiction. In this blog, we dispel the most prevalent myths regarding loan settlement and how Guardian Legal Solutions, a reputable loan settlement company, can assist you in getting through the process successfully.
Myth 1: Loan Settlement is the Same as Loan Waiver
Fact: People get confused between loan settlement and a loan waiver, but they are two different things. Under a loan settlement, the lender will agree to accept less money as the total payment since the borrower cannot repay the total amount. A loan waiver, however, involves wiping out the debt entirely, generally by the government or lending institution in exceptional circumstances.
Myth 2: Loan Settlement Wipes Out Debt Immediately
Reality: Loan settlement does not cancel debt overnight. It is a negotiation process between the lender and the borrower, usually brokered by a loan settlement agency such as Guardian Legal Solutions. Careful consideration, documentation, and negotiations have to be undertaken before a loan settlement figure is arrived at that can be mutually acceptable.
Myth 3: Loan Settlement Completely Ruins Your Credit Score
Reality: While settling a loan does impact your credit score, it is not permanent. Typically, loan settlement is reported as “settled” on your credit report, which can lower your credit score. However, with disciplined financial habits, such as timely payments on future loans and credit rebuilding strategies, you can gradually improve your credit score over time.
Myth 4: Only People with Huge Debts Can Opt for Loan Settlement
Reality: Loan settlement is not reserved for individuals with huge debts. Borrowers with problems paying back unsecured loans, credit card charges, or personal loans can also attempt to settle a loan if they experience legitimate financial hardships. Meeting with a loan settlement agency is an effective way to determine if loan settlement will be advisable in your particular situation.
Myth 5: Banks and Lenders Don’t Agree to Loan Settlements
Fact: Full repayment is preferred by lenders, but they may accept settling a loan when there is a high possibility of non-repayment. Banks and financial institutions tend to accept settlements on loans to get back a part of the loan instead of incurring a total loss.
Myth 6: Loan Settlement is Always the Best Option
Reality: Loan settlement must be a last option. If you can pay by debt consolidation, restructuring, or legal financial counseling, then those are more preferable in the long term. A professional loan settlement company, like Guardian Legal Solutions, can assist you in looking into alternatives before deciding.
Myth 7: You Don’t Need a Loan Settlement Agency for Negotiations
Reality: Although borrowers sometimes try to negotiate with lenders themselves, hiring a loan settlement agency such as Guardian Legal Solutions improves the possibility of getting the desired deal. Experts know lender procedures, the law, and negotiation strategies that can assist you in getting the optimal loan settlement.
Final Thoughts
Loan settlement is a feasible debt relief solution, but myths tend to discourage borrowers from making the best choice. Knowing the truth about settling a loan can guide you through financial troubles intelligently. If you’re facing debt and require professional advice, Guardian Legal Solutions, a top loan settlement company, is ready to help you analyze your alternatives and become financially stable.
Phone us today to hear more about how we can assist you in settling your loan and taking control back of your money!