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Bad Debt Settlement Companies
It can’t be said enough that debt settlement companies are a poor option if you’re strapped with overwhelming credit card debt. From the New York Times Saturday:
When you sign up, many firms require you to pay a sizable fee upfront. Or they may levy initial set-up and monthly fees, and charge a percentage of the amount they saved you. They typically advise you to stop paying your debts and tell you to put aside money each month in a separate account over a period of two or three years. That sum will eventually be used to negotiate a settlement, usually about 60 percent of what you owe. In the meantime, though, credit card companies continue to charge interest and late fees. The creditor may sue. And the phone will probably continue to ring incessantly. The companies can offer no guarantees — except that your credit score will drop.
It’s no surprise that bad times spark opportunists who prey on people who feel they don’t have any choices. New York State attorney general Andrew Cuomo is investigating them – let’s hope he pulls a Spitzer (during criminal-fighting AG days, pre-scandal).
The Times suggests alternatives to the debt settlement company:
Settle yourself. “If you have only a few thousand dollars in debt on one or two cards, you may try calling your card issuer and asking it about any repayment plan for people facing financial hardship.”
Call in a consigliere. The credit counseling profession must be booming. Find one who is affiliated with a legitimate nonprofit umbrella organization to help you figure out the best path. They will probably help you set up a debt management plan, in which they negotiate a lower interest rate.
Consider bankruptcy. Bankruptcy helps protect your assets while getting you out of debt. There are consequences, of course. A good bankruptcy lawyer should offer a free initial consultation to discuss.
For additional options, check out Recessionwire’s Dealing with Debt guide.
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4 comments for “Bad Debt Settlement Companies”
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I wonder if I could have the govt come in and give me a “bailout” for my bills…
It is true that you can negotiate settlements on your own with your creditors, but you can also sell your home on your own without a real estate agent. Debt Settlement companies act as your agent dealing with debt collectors. The price you pay for this service is cheap compaired to collection calls day and night, and you will likely have your debts settled for less than you could do on your own. If all the lies about debt settlement companies were true, the FTC would have put them out of business long ago. They are very strict on debt settlement companies.
All those harassing phone calls and letters will become history when using Debt SOlution Centers. All that surmounting tension would be gone.
That’s why credit card debt settlement is so essential. You can approach credit card debt settlement in two ways.
You can either go for credit card debt settlement all by yourself or you can take advice from a professional debt settlement company like Debt Solution Centers.
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