Debt Settlement Companies - What They Don’t Tell You is Amazing
Friday, July 31st, 2009 Subscribe To Our Feed
Considering contracting with a debt consolidation company or a debt settlement companby because you think that by hiring them you’ll get out of debt faster and save money on your monthly bills? If you are make sure to thoroughly research them before you sign a contract because there are an awful lot of scams out there and you can end up in worse shape than you are 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. It sounds like they’re making an awful lot of money for a company that’s supposed to be non-profit.
Let’s separate fact from fiction and look at what is supposed to happen:
A debt settlement company pays off your loans from a trust account they set up. That’s true. It’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.
They only begin to negotiate with your creditors after they put your money into a trust account. Then, they’ll make a lump sum-settlement with your creditor. However, it happens after there’s enough money in the account to pay the entire amount.
In theory this is okay. The reality is that it can take years to build up enough cash in your trust account to pay each of your creditors. What can happen in the meantime is your creditors can garnish your wages after suing you.
And be ready for your debt to increase while your debt settlement company is negotiating with your creditors because they don’t make any arrangements with them to stop your late fees, interest, or over limit fees.
So you can end up being sued.
To make matters worse, if the judgement’s 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?
Either you can negotiate with your creditors yourself or you could work 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.
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’s also true for the “non-profit” companies.
If you do decide to sign up with any service, be cautious. Ask questions. If they try to avoid your questions or you feel you’re getting the run around, move on to another company. There are some legitimate debt settlement companies that actually do help people. But you might just have to sift through a number of them until you find one that you’re comfortable with.
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