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

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.

Did you know that a debt consolidation company is not the same as a debt settlement or debt negotiation company?

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. And, on top of that, they charge a monthly service fee that’s determined by the amount of money you owe. Does that sound like a non-profit company to you?

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 a fact. But you can run into a real problem with the amount of time it takes them to 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, 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.

This might sound good in theory. 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 you might end up being sued.

Then, if the judgement is 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?

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.

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. But they will take out their non-refundable administration fees and monthly service fees. 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. You just might have to research a number of them in order to find the one you are comfortable with.