Ever wonder why there are so many advertisements from Debt Settlement Companies? Are their fees worth the services they offer? This action would only be considered if you own money and are in financial trouble. Let’s take a look at the process and the advantages and/or disadvantages of hiring one of these companies.
A consumer talks with a company either through their own assertiveness of through the initiation of the company itself.
The debt settlement company explains their programs, the process involved, the fees. Hopefully they will also discuss any negative impact this could have on your credit and they might also explain some of the services they are unable to accomplish for you.
The consumer is impressed with the debt settlement company’s service and enrolls in their program. They provide all information requested by the debt settlement company and in turn a trust account is set up.
The company will most likely ask when the consumer wishes to start the program. Once a start date is agreed upon, the company will immediately deduct fees for their services upfront.
Beware of the companies that send out letters to your creditors notifying them that you are in their program. In some instances this could trigger lawsuits and potential increased calls from creditors.
As time passes, the consumer starts accumulating funds in the trust account but remember the debt settlement company is continuing to withdraw funds from your account. If might be months or possibly a year before you have enough funds to negotiate a settlement with the creditor.
Once you feel you have enough funds in your account or the company settling your debt agrees there are enough funds to settle an account, they will begin the process of contacting the creditor to try and negotiate a settlement.
Does this process really seem to make sense? Even consider the company might have an advantage over the consumer in negotiations of this nature, but could you possibly negotiate the same settlement? Imagine stopping payment on your debts, putting money aside yourself and when you feel you have enough money saved to negotiate with your creditors, give them a call and start negotiating. In today’s economy many creditors are sending out settlement offers to their customers with little or no contact at all.
Consumer Report magazine came out with statistics that showed settlement offers negotiated by the debt settlement companies were not any more attractive or lower than the direct negotiations the consumer had with their creditor(s).
These companies are being investigated by the Attorney General’s from across the country. They are charging consumers thousands of dollars for services that could very easily be accomplished by the consumer themselves.
Your debt troubles will not go away with a miracle. And many are on the “up and up” but be cautious. If they can settle some of your debt for a fraction of the total balance owed, it could be a prayer come true. Do not ignore your creditors. Some of them are in financial trouble as well and are much more flexible with trying and come to an agreement with you, so it’s a win-win situation. Ignoring your creditors might only escalate your problems. It is costly for a creditor to take you to court, request a judgment or garnishment and they are interested in doing what they can to work with you.
Creditors offering “debt settlement” to consumers is becoming more and more popular. Some creditors even have areas on their website to help assist the consumer with a debt settlement. This practice has been around for a few decades, but is now front and center especially with the recent economic downturn. The creditors are much more flexible in their negotiations with the consumer. This is not exciting the debt settlement companies as it’s affecting their business and several debt settlement companies are finding themselves in court for deceptive practices.
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