What Debt Settlement Companies Don’t Tell You is Absolutely Shocking
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? 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.
Did you know that debt consolidation companies are not the same as debt negotiation companies or debt settlement companies?
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. Doesn’t sound like non-profit to me.
Let’s separate fact from fiction and look at what is supposed to happen:
Debt settlement companies pay off your loans from a trust account that they’ve set up. That’s a fact. The problem arises from the amount of time it takes before they 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. The reality is that it can take years to build up enough cash in your trust account to pay each 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 what can happen is you may be 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.
Go this route to get out of credit debt and you will not only save this money, you will also save whatever money you would have 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. However they will deduct their non-refundable monthly service fees along with their administration fees. That’s true for the “non-profit” companies also.
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. 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.
Related posts:
- What Debt Settlement Companies Don’t Tell You is Absolutely Shocking
- What You Should Know About the Safety of Debt Settlement Companies
- Persolvo Data Systems Adds Over 100 Debt Settlement Companies and $1.2 Billion in Debt to its Database
- Credit Card Debt Negotiation Settlement: What You Need to Know
- Getting Proper Use of Debt Repair Companies
Tags: credit debt settlement, Debt Relief Consolidation, get out of credit debt