Debt Settlement Companies – What They Don’t Tell You is Absolutely Amazing
Are you thinking about contracting with a debt settlement company or a debt consolidation company to help you save money on your monthly payments and get out of debt quicker? 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.
Did you know that a debt consolidation company is not the same as a debt settlement or debt negotiation company?
What you might find surprising is that although a lot of credit debt settlement companies call themselves non-profit they will actually charge you an initial administration fee of hundreds of dollars 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. It sounds like they’re making an awful lot of money for a company that’s supposed to be non-profit.
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. However, you can run into a problem with the time it takes before they make the 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.
This might sound good in theory. In reality, years can go by before you have enough money in your trust account to pay every one of your creditors. What can happen in the meantime is your creditors can garnish your wages after suing you.
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.
Then, if the judgement is against you, you’ll owe 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.
So What Can You Do?
You might want to negoitiat with your creditors yourself. Or, you could work with a debt relief consolidation company. If you negotiate you will find that most of your creditors will agree to taking smaller monthly payments and perhaps even stopping all interest and fees from piling up.
Try this in order to get out of credit debt and you’ll not only save money, you’ll also save the money you would’ve paid to a settlement company.
But what happens if you’re already involved with a settlement company and you’re not happy with their performance? Most of them will let you cancel your account and give you a refund for what you’ve already paid them. Less their non-refundable monthly service fees and administration fees, of course. That goes for “non-profit” companies as well.
If you do decide to sign up with any service, be cautious. Ask questions. It they avoid answering your questions or if they give you the run around, move on to a different company. There are some reputable debt settlement companies out there. You just might need to research a number of them before you find one that you’re comfortable with.
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Tags: credit debt settlement, Debt Relief Consolidation, get out of credit debt