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Debt settlement is a type of debt management plan in which the debtor and creditor agree on a plan for the debtor to pay a reduced amount to settle the balance. Debtors come out with the upper hand in debt settlements,because they don't pay the creditor the full amount that they owe. Although these agreements and transactions are completely legal, it begs the question as to whether or not debt settlement is morally correct. Read on for more information on the moral discussion of debt settlement.

 

What is the moral dilemma about

Basically, the moral dilemma with regard to debt settlement is the fact that debtors aren't paying the creditor the total amount of what they owe. Let's analyze a similar situation to get a better picture. Say you borrow $1,000 from a relative and you use the entire $1,000, yet you only repay $600. Any person with a good conscience would feel a moral obligation to repay the full $1,000 to their relative. This is very similar to a debt settlement situation with a creditor, wherein you borrowed a certain amount of money and you only repaid a portion of your debt.

Different perspectives and solutions

On one hand, you may truly feel morally wrong for going through with debt settlement. On the other hand, you may comfort yourself in the fact that the creditor agreed to the deal, and you can live guilt-free with the settlement. For those who are too morally concerned to go through with a debt settlement, there are some other options available. One option is to try a debt consolidation plan that will put you in a better position to pay off your debts in full over a long period of time. Another option is to simply file for bankruptcy and get the government's help with your debt. In the end, the decision is up to you.