Extinguishment of debt is a process wherein a borrower removes or eliminates a debt by means of repayment or settlement. There are a variety of ways to get rid of debt, and consumers can quickly extinguish their debt.
The first step is to create a practical repayment plan and adopt better spending habits. In addition, there are several companies that offer debt extinguishment services. In many instances, these companies or agencies also work to protect a person’s assets. A professional service benefits borrowers on the threshold of bankruptcy. Debt extinguishment is a lengthy process. However, a service has the know-how to effectively negotiate a better interest rate and convince creditors to settle the debt.
In the majority of cases, the amount paid to extinguish the debt is usually less than the actual debt balance. Hence, extinguishment of debt should be reserved as a last resort. Persons who consider a bankruptcy might be able to salvage their credit score. Of course, this depends on the creditor’s willingness to accept a lesser amount. Creditors will report an extinguishment of debt to the credit bureaus. However, the damage is minor in comparison to the negative impact a bankruptcy will have on your credit history.