The Particulars of a Debt Settlement Company
A debt settlement company is a perfectly rightful solution if you are deeply in debt and are seeking an alternative to bankruptcy. However, the costs can be steep and debt settlement does have perils if you aren’t careful.
Creditors would much rather agree to negotiate your bills than have you file for bankruptcy and get nothing. In exchange for an agreed upon one-time payment between 20% and 75% of what you owe, the creditor forgives the remainder of your debt and reports it to the credit card companies asresolved. On your credit report the leftovers of settled deals will show zero. Any previous history of overdue payments or chargeoffs will remain on your credit report.
A debt settlement company classifies debts in one of two ways—secured debt or unsecured debt. A secured debt is like an auto or home. You can give it back if you can’t make your payments. Unsecured debts are things such as gas cards, department store cards, medical bills, personal loans, credit cards or bounced checks. A creditor will oftenreconcile with you if it feels it is their solitary chance to acquire something. If theybelieve that you do not posses many assets there is no point in suing you because even if they win there is nothing they can collect from you.
A debt settlement company poses several features to attract attention. Some of them include: reduce your debt by 40%, immediately reduce your monthly payment, be debt-free in 12-36 months, avoid bankruptcy, and prevent foreclosure. Debt settlement is an ambitious action taken toremove debt as quickly as possible.
There are some very positive things about debt settlement companies: pay off debts for less than what you owe, and pay off debts quicker than you would by paying the minimum payment each month.
There are some negative things about debt settlement companies: your credit score could go lower, you have to already be behind 6 months on your payments, you still receive calls from creditors, but you can ask them to call the company that represents you, and you still have to pay taxes on the amount that was deducted from your debt.
The fees that a debt settlement company charges are extremely expensive. As an example, a debt settlement company offered to settle $33,551.00 in debt. However, the debt settlement company said that $5032.00 had to be paid to them up front. The client saved for two years to be able to pay that $5032.00. Only after the service fee was paid did the client actually start saving for the settlement. A person could have gotten a consumer bankruptcy attorney to help with that debt problem for a lot less than $5032.00. There is a sign up fee and a monthly fee. And then of course you have to pay a part of the total debt. Many creditors—once they know a client is employing a debt settlement company, will transfer it to a collections agency sooner or even sue you. When a creditor takes legal action, the debt settlement company may drop your account because they don’t have theauthority to give legal advice or represent you in court.
When it comes right down to it, you just need to know the good and the bad of a debt settlement company, and know that there are some of them that are more on the up and up than others. When you get all of your concerns asked in advance, and feel at ease going into it that you know what is to be expected, and then you can be a lot more satisfied with what comes of it.
Creditors would much rather agree to negotiate your bills than have you file for bankruptcy and get nothing. In exchange for an agreed upon one-time payment between 20% and 75% of what you owe, the creditor forgives the remainder of your debt and reports it to the credit card companies asresolved. On your credit report the leftovers of settled deals will show zero. Any previous history of overdue payments or chargeoffs will remain on your credit report.
A debt settlement company classifies debts in one of two ways—secured debt or unsecured debt. A secured debt is like an auto or home. You can give it back if you can’t make your payments. Unsecured debts are things such as gas cards, department store cards, medical bills, personal loans, credit cards or bounced checks. A creditor will oftenreconcile with you if it feels it is their solitary chance to acquire something. If theybelieve that you do not posses many assets there is no point in suing you because even if they win there is nothing they can collect from you.
A debt settlement company poses several features to attract attention. Some of them include: reduce your debt by 40%, immediately reduce your monthly payment, be debt-free in 12-36 months, avoid bankruptcy, and prevent foreclosure. Debt settlement is an ambitious action taken toremove debt as quickly as possible.
There are some very positive things about debt settlement companies: pay off debts for less than what you owe, and pay off debts quicker than you would by paying the minimum payment each month.
There are some negative things about debt settlement companies: your credit score could go lower, you have to already be behind 6 months on your payments, you still receive calls from creditors, but you can ask them to call the company that represents you, and you still have to pay taxes on the amount that was deducted from your debt.
The fees that a debt settlement company charges are extremely expensive. As an example, a debt settlement company offered to settle $33,551.00 in debt. However, the debt settlement company said that $5032.00 had to be paid to them up front. The client saved for two years to be able to pay that $5032.00. Only after the service fee was paid did the client actually start saving for the settlement. A person could have gotten a consumer bankruptcy attorney to help with that debt problem for a lot less than $5032.00. There is a sign up fee and a monthly fee. And then of course you have to pay a part of the total debt. Many creditors—once they know a client is employing a debt settlement company, will transfer it to a collections agency sooner or even sue you. When a creditor takes legal action, the debt settlement company may drop your account because they don’t have theauthority to give legal advice or represent you in court.
When it comes right down to it, you just need to know the good and the bad of a debt settlement company, and know that there are some of them that are more on the up and up than others. When you get all of your concerns asked in advance, and feel at ease going into it that you know what is to be expected, and then you can be a lot more satisfied with what comes of it.
