August 23rd 2009 08:42 pm
Debt Settlement Companies – What They Don’t Tell You is Shocking
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?
If so, be sure to do a thorough job researching the company before you sign a contract with them. That’s because there are a huge number of scams out there, so you can even end up in worse shape than you are now.
Debt consolidation companies aren’t the same as debt settlement or debt negotiation 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. 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.
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.
In theory this is okay. In reality, years can go by before you have enough money in your trust account to pay every one of your creditors. What may happen in the meantime is your creditors might sue you in order to have your wages garnished.
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 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.
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.
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’s true for the “non-profit” companies also.
So if you decide to sign up with any service ask questions and be cautious. If they try to avoid your questions or you feel you’re getting the run around, move on to another company. There are some reputable debt settlement companies out there. You just might have to research a number of them in order to find the one you are comfortable with.
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Tags: credit debt settlement, debt relief consolidation, get out of credit debt
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