Debt Reduction - Credit Score Or Peace of Mind From Collection Calls - Which Option to Choose?

Most of us are very concerned about our credit score. So much so that we try to keep our credit score high even if it means sacrificing many essential expenses. However, what we fail to understand and what our creditors never bother to tell us is that our credit score takes a huge hit the moment the debt is transferred to a debt collector.

Most financial institutions have an in house debt collection department. The department consists of individuals who keep track of the various loans and obtain recoveries from debtors. In case of hospitals and other medical institutions, the task is usually outsourced to a third party collection agency.

In almost all collection cases, the debt is handed over in the form of a sale. The lender sells the debt to the collection agency. The sale transaction indicates that the lender does not expect the borrower to repay and that the lender is prepared to dispose the account at dirt cheap prices. The lender just tries to recover minimum expenses incurred on the account so that the total loss amount is slightly reduced.

This puts the collection agency in a high risk - high profit position. If it recovers 100% repayment from the borrower, then it would end up with a huge profit. On the other hand, if it does not succeed and the borrower opts for bankruptcy, the collection agent will have to suffer a loss.

This is a reason why collection agents often result to illegal and quasi legal tactics to recover money. This includes making repeated phone calls, sometimes more than two dozen calls in a day, to pressurize the borrower. Agents often make repeated visits to the office of the borrower as well. There are specific rules and regulations applicable to such agencies.

If you have started receiving repeated phone calls from your collection agents, you can be rest assured that your account has been transferred and your credit score will already take a hit once this information is passed on to the credit bureaus. This combined with the fact that you are finding it difficult to make regular repayments should help you decide in favor of debt settlement.

Debt settlement is a very popular debt relief option that helps individual get waivers ranging from 50% to 70% of the original amount owed. Once this waiver is received, the individual just has to repay the balance amount of within the specified period and he or she will be completely free of debt.

If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called "Free Debt Relief Networks" that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below: