If you're thinking about using a service of debt consolidation or debt settlement to help you get out of debt faster and save money on your payments monthly, be sure to do your homework before choosing a company. There are definitely scammers and scams out there.
First let me say that the consolidation debt is * not * the same as debt settlement / negotiation, which most people do not realize.
Debt settlement companies charge hundreds of dollars as initial administrative expenses "to set up your account, plus a monthly service fee. Rates vary depending on the company and the amount of their debts.
These companies take your money every month, but do not make monthly payments to your creditors! Instead, they put in a trust account, negotiate their debts with creditors, then make a lump-sum payment when there is enough money in your account to pay a creditor in full.
That * may take years depending on the amount of debt you owe each creditor. Meanwhile, you can be sued by your creditors and your wages can be garnished! (Or just do not make payments to your creditors. You'll end up in the same place without having to pay someone to help you get there!)
Settlement companies do not ask your creditors to stop all interest, surcharges and fees that exceed the limit of derivatives. That means that while negotiations are ongoing, their accounts will continue growing! So if you're sued and the decision goes against you, you will owe more money than before!
And shoddy companies, which is a large amount of, do not tell you * any * of this front up. I called it "getting permission by omission" because they simply do not tell you how your program * before * You sign an agreement with them. Or after, for that matter. But if the right questions, eventually you're going to find out. (Or when shit hits the fan. What happens first.)
Let me give an example of how the debt settlement.
Say you have $ 20,000 in unsecured debt card credit. You owe $ 10,000 to a credit card company, another $ 6,000 and $ 4,000 to third. You agree to a plan of five years in which pays $ 250 a month to the settlement company. (After all, $ 250 a month for 60 months is only $ 15,000, so you're saving $ 5,000 you will be debt free in 5 years, right?)
The administrative expenses will cost you $ 750. Your name 3 monthly payments go towards that and nothing is put into your account trust until the 4th month.
The settlement company keeps $ 50 of your payment of $ 250 each month for the service fee. That means $ 200 per month being added to his trust account.
Most debt settlement companies claim to be able to negotiate its debt by about 50% of what you owe. So we will use the credit debt lower card as an example.
If you owe $ 4,000 and your creditor agrees to accept $ 2,000 as payment in full, it will take 10 months at $ 200 per month to have enough money in your escrow account to pay only a credit card.
But remember, their first 3 payments to the settlement company only paid the administration fee. This means that your first credit card settlement is 14 months * after * started sending them money.
So what is the problem? It is very simple. Your lender will not agree to accept half of their actual debt unless, or until they can be paid in full. Otherwise, you are expected to make their normal monthly payments.
Since you do not have $ 2,000 in his trust account and not are up more than a year after it stopped paying your creditor directly, is likely to lead to court and ask that your salary is arrested long before you have accumulated $ 2,000.
What about your other creditors? Well, I'll be waiting longer to get your company money the establishment. $ 6,000 debt will take 15 months * * more to pay, assuming your creditor expects long and agrees to 50%. And that $ 10,000 bill? Do the math.
On the other hand, if you subscribe to a plan for three years with the company's establishment, its debts would be paid faster. But the question is, will your creditors wait that long? Probably not.
The facts are, you can negotiate with your creditors yourself. Most will agreed to have a smaller monthly payment and let all accrued interest and fees. And, of course, will save thousands of dollars in fees to a company liquidation.
Before signing up for any services, please make sure you check out the company thoroughly. And do not let the words "without profit "fool either. Many debt settlement companies is intended to be non-profit.
Returning to the example above, if you pay $ 15,000 over a frame of 5 years time and settle your debts at half of what he owed, which will make you $ 5,000. I would call it a benefit, especially because it can might not have helped in any way.
Most companies allow you to cancel your account and get a refund of what you paid, minus administrative costs non-refundable and monthly service charges. If you feel you have been misled about its program, do not hesitate to argue until the cows come home. Present a complaint with the Better Business Bureau or hire an attorney if you feel you are carrying anything.
You can visit the Better Business Bureau's website ( http://www.bbb.org ) and find reports on hundreds of companies. Here is a small list of companies that have a poor reputation with the BBB:
National Consumer Council debt LLC – Irvine, CA (AKA NCDC, United Consumer Law Group)
Financial Recovery Services – Burbank, CA
Debt of Legal Services – Anaheim, CA
Debt Relief of America – Los Angeles, CA (AKA AM Debt, American Relief Debt, debt relief)
Please be careful when choosing a debt company and help make a lot of questions before accepting anything. If you finds that they are evading your questions, run faster and run a lot. There are reputable companies out there, so keep looking until you find one.
Denise Hall wrote this article from her own personal experience so that others can avoid the traps that she fell into while searching for debt help. Her search finally turned up an honest company, and she highly recommends that anyone who needs help getting out of debt contact CareOne Debt Relief Services. Denise receives compensation for advertising the CareOne brand of debt relief services based on each qualified consumer who links to the CareOne website directly from our site.
Credit Card Debt Consolidation Services – Credit Results USA
