Is Debt Settlement Morally Wrong?

Debt settlement is a legal agreement between a debtor and a creditor where a portion of the debtor's debt is simply "forgiven." Settling "bad debt" is actually the best way for creditors (credit card companies, banks and debt collectors) to get the most money from consumers in financial hardship, which is why debt settlement works so well.

Here's what people said in a recent survey when asked, "Do you think Debt Settlement is Morally wrong?"

"No, I do not think it'sis morally wrong, however, I still feel people should try every avenue before taking this step." "If it were to someone other than a blood-sucking credit card issuer it might be a moral question, but not to them." "I just enrolled with a different debt relief program about 2 months ago. Not really thrilled with them but then again I really do not know how all this really works. I am 2 months into the program, have made 2 payments and my phone is still ringing off the hook. Is that normal? If I decide to, is it possible to terminate with them and go with you (your company). You certainly have a lot more info on your web site than the company I am currently working with." "Debt Settlement is not morally wrong - credit card companies gouging people with exorbitant interest rates are MORALLY WRONG!" "I truly believe most people want to pay their debts. And that they should. And, when they have fallen on hard times, other people have a moral duty to help those in trouble, not make things more difficult. Whether it's a company or an individual, what right has that entity to "kick someone when they are down?" That's exactly what they do: raising interest rates, closing accounts, filing lawsuits, attaching wages, and harassing constantly with collection calls and letters." "Debt settlement is often the best way out for people who are so far under they think they will never see the end of it! It is far better than [chapter 13] bankruptcy, it's over sooner and they have a fresh new start, instead of something hanging over their heads for 10 - 12 years."

What's Your Opinion?...Is Debt Settlement Morally Wrong?

If you think debt settlement is morally wrong, I respect your opinion.
In my honest and humble opinion, I think debt settlement is a moral, legal and ethical option for people with serious debt in financial hardship to be debt free ASAP. Debt Settlement is "the right thing to do" for many people.

Debt settlement offers relief from monthly payments on credit card debt far beyond credit counseling (debt consolidation), which usually offers little relief if any. Settling your debts also allows you to get you out of debt much faster.

Making minimum payments is the only option more profitable to credit card companies than credit counseling. Third most profitable is debt settlement, and least profitable to creditors is chapter 7 bankruptcy.

Many people have a narrow-minded opinion that "debt settlement ruins your credit", but the truth is bankruptcy and credit counseling BOTH negatively affect your credit, often much more severely than debt settlement.

But how debt settlement affects your credit is usually a non-issue...

People in financial hardship have already "taken the hit" on their credit score, or inevitably will, even if they are current, because they will not be able to keep up with their payments due to circumstances beyind their control. These people must eliminate their credit card debt balances to improve their credit. The cost of remaining in high interest credit card debt is too high to wait around until it gets that bad anyway.

If you find yourself in trouble, then it's time to handle it RIGHT NOW, even if "stuff" hasn't hit the fan just yet.; the sooner the better, and cheaper, period.

Ask any mortgage professional if they give loans to people who have "paid/settled" on their credit reports, even in the past year, and they'll tell you, "Every day." Then ask if you could get a loan today if you had filed bankruptcy last year, and they'll all tell you the same thing every time: "No way."

In December 2009, Fannie Mae extended the negative effects of bankruptcy filings on credit reports for mortgage qualification from 24 months to 48 months, requiring a "Refer with Caution/IV recommendation" for most bankruptcies filed, discharged, or dismissed within the last 48 months.

Debt settlement is better for the consumer and the creditor (and the economy) than bankruptcy.

How can anyone say debt settlement is morally wrong and bankruptcy is morally right? That makes no sense at all. Wait, what? It's wrong to repay a portion of what you owe, legally and amicably, but it's OK to "stiff" your creditors by filing chapter 7 bankruptcy (if you qualify) and pay nothing at all? I disagree.

Debt settlement and bankruptcy are both legal and ethical; IF you qualify and do it "the right way."

Many people, however, feel very strongly that bankruptcy is immoral. I faced personal bankruptcy myself in 2001, thinking I "had to" file, but then I realized it was my choice. Instead, I chose to work hard to pay off and settle my own debts to avoid filing bankruptcy. Yet I've also helped MANY people file bankruptcy over the years because it was the very best thing for them to do in their unique situation. I'll let you decide how you feel for yourself.

Before judging people for choosing debt settlement to get out of debt, thinking, "it'll never happen to me," let's remember: We could be wrong...

• We don't control the weather or what happens in life.
• Most people suited for debt settlement have had legitimate financial hardship due to things out of their control; job loss, business failure, medical hardship, etc.
• Most people seeking debt settlement are good, honest people who never intended to stop paying their bills, BUT "STUFF HAPPENS"...

While consumers may be foolish to take on too much debt at high interest rates, the banks are the ones morally wrong in their practices. Many consumers, as you may know first-hand, have taken on low interest credit card debt only to have their interest rates increased systematically at no fault of their own by greedy creditors in response to the "Credit CARD Reform Act of 2009", as credit card companies race to maximize profits before the new laws take full effect on February 22, 2010.

When it comes to "right or wrong", many of our beliefs are rooted in the Bible. The "Good Book" says, "forgiveness of debt" is Biblical. What creditors are doing to consumers with high interest credit card debt is NOT. In fact, it's despicable!

Debt settlement is an honorable agreement between you and your creditors where a portion of your debt is simply "forgiven." It's actually the best way for creditors to get the most money from consumers in financial hardship, which is why debt settlement works so well.

I feel it is morally wrong to be deep in debt at high interest rates and doing nothing about it. I think it's insane; we need our heads examined if we think it's best to continue paying minimum payments on high interest credit card debt. If we find ourselves deep in high interest credit card debt, then we need to "right our wrongs" the best and fastest ways possibly.

The bottom line on Debt Settlement?

Debt settlement is a moral, legal and ethical option for people with serious debt in financial hardship to be debt free ASAP.

Debt settlement is the fastest way to be debt free for the lowest costs and the biggest savings while avoiding bankruptcy.
Debt settlement is a means to an end, and it could be the end to your own personal slavery to credit card debt; allowing you to legally, morally and ethically "get out of debt" as quickly and cheaply as possible.