What Debt Settlement Companies Don’t Tell You is Absolutely Amazing

« « Know More About Consolidation of Debt | Bill consolidation and debt management » »

Tuesday, August 4th, 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.

Did you know that debt consolidation companies are not the same as debt negotiation companies or debt settlement companies?

And even though many credit debt settlement companies call themselves non-profit, they will charge you an initial administration fee of several hundred dollars just to set up your account. And to put the icing on the cake, they’ll proceed to charge you a monthly service fee that’s based on how much money you owe. Does that sound like a non-profit company to you?

What’s supposed to happen - separating fact from fiction:

Debt settlement companies pay off your loans from a trust account that they’ve set up. That’s true. It’s a fact. The problem arises from the amount of time it takes before they make those payments.

What’s amazing is that even though you pay your debt settlement company money every month they aren’t necessarily making monthly payments to the people you owe money to.

Once they put your money into a trust account they begin negotiating 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. In the meantime your creditors can sue you and they can garnish your wages.

And while they’re negotiating, your debt will continue to grow because debt settlement companies do not make any arrangements with your creditors to stop late fees, over limit fees, or interest.

So what can happen is you may be sued.

Then, if the judgement is against you, you’ll owe more money than you did before you hired the company.

And what makes things even worse is that many debt settlement companies don’t disclose this information until after you’ve signed an agreeement 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.

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.

What if you have already signed up with a settlement company and things aren’t working to your satisfaction? Most of them will allow you to cancel your account and they will refund what you’ve paid them. However they will deduct their non-refundable monthly service fees along with their administration fees. That’s true for the “non-profit” companies also.

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. You just might need to research a number of them before you find one that you’re comfortable with.

Get Social, Bookmark Us!!:These icons link to social bookmarking sites where readers can share and discover new web pages.