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

Thinking about contracting with a debt consolidation company or a debt settlement companby because you think that by hiring them you’ll get out of debt faster and save money on your monthly bills? If you are make sure to thoroughly research them before you sign a contract because there are an awful lot of scams out there and you can end up in worse shape than you are now.

Debt consolidation companies aren’t the same as debt settlement or debt negotiation companies.

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. Then they’ll charge you a monthly service fee that’s based on 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:

Debt settlement companies pay off your loans from a trust account that they’ve set up. That’s true.  It’s a fact. The problem arises from the amount of time it takes before they make those payments.

I hope you’re sitting down because even though you’re paying the debt settlement company you hired every month, they’re not necessarily making monthly payments to the people you owe.

They only begin to negotiate with your creditors after they put your money into a trust account. 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.

Theoretically sounds okay. In reality, it can take years for you to build up enough money in your trust account to pay off every one of your creditors. What may happen in the meantime is your creditors might sue you in order to have your wages garnished.

And while they’re negotiating, your debt will continue to grow because debt settlement companies do not make any arrangements with your creditors to stop late fees, over limit fees, or interest.

So you can end up being sued.

If the judgement is against you you will end up owing more money than you did before you hired the company.

To make matters worse, many debt settlement companies will not tell you any of this before you sign an agreement 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.

Go this route to get out of credit debt and you will not only save this money, you will also save whatever money you would have paid to a settlement company.

If you’ve already gotten involved with a settlement company and things are not working out to your satisfaction most of them will let you cancel your account and get a refund of what you’ve paid to them. Less their non-refundable monthly service fees and administration fees, of course. That goes for “non-profit” companies as well.

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 reputable debt settlement companies out there. But you might just have to sift through a number of them until you find one that you’re comfortable with.