Debt Settlement Companies - What They Don’t Tell You is Absolutely Shocking
Thursday, August 6th, 2009 Subscribe To Our Feed
Are you giving some consideration to contracting with one of the debt settlement companies or debt consolidation companies because you believe they will help you to save money on your monthly payments and get you out of debt faster? Then be sure to do research them thoroughly before you sign on the dotted line. There are a lot of scams out there and you might end up in worse shape than you’re in now.
Debt consolidation companies aren’t the same as debt settlement or debt negotiation companies.
What surprises a lot of people is that although many credit debt settlement companies call themselves non-profit, they charge several hundred dollars as an inititiation fee just to set up your account. Then they’ll charge you a monthly service fee that’s based on the amount of money you owe. Doesn’t sound like non-profit to me.
Let’s take a look at what’s supposed to happen.
A debt settlement company will pay your loans out of a trust account that they have set up. That’s a fact. But you can run into a real problem with the amount of time it takes them to make those payments.
This is going to sound amazing, but even though you’re paying your debt settlement company every month, they’re not necessarily paying the people you owe money to every month.
After they put your money into a trust account they negotiate your debts with your creditors. Then, when there’s enough money in the trust account, they will make a lump-sum settlement with your creditor.
Theoretically sounds okay. In reality, it can take years for you to build up enough money in your trust account to pay off every one of your creditors. In the meantime your creditors can sue you and they can garnish your wages.
And while the negotiations are going on, your debt will increase because debt settlement companies don’t arrange to stop interest, late fees, or over limit fees with your creditors.
So you might end up being sued.
If the judgement is against you you will end up owing more money than you did before you hired the company.
And to pour salt into your wounds, most debt settlement companies don’t tell you any of this before you sign a contract with them.
What Can You Do?
As an alternative you can negotiate with your creditors yourself or consider working with a debt relief consolidation company. Negotiate yourself and you will find that many creditors will agree to take a smaller monthly payment and might even stop your fees from piling up and might even stop your interest.
If you do this to get out of credit debt, you’ll save the money you negotiated and also save the money you would have paid a settlement company.
If you’ve already gotten involved with a settlement company and things are not working out to your satisfaction most of them will let you cancel your account and get a refund of what you’ve paid to them. Less their non-refundable monthly service fees and administration fees, of course. That goes for “non-profit” companies as well.
So if you decide to sign up with any service ask questions and be cautious. If it seems like they’re avoiding your questions or like they’re giving you the run around, move on to another company. Keep in mind that there are legitimate debt settlement companies out there. But you might just have to sift through a number of them until you find one that you’re comfortable with.
Technorati Tags: No Tags
Related Tags: No Tags
Possible Related Posts
