Debt Settlement
There are many debt settlement agencies who will create a debt settlement plan and repayment program for a fee. While they cannot do anything beyond what can be done by you, the consumer, you may wish to use a debt settlement company for the convenience of not having to organize all the repayments or contact the creditors yourself, plus a good agent will be able to negotiate with creditors on your behalf. If you consider yourself a weak negotiator, you may feel more confident using an agency to settle your debts on your behalf.
Most settlement plans seek to payoff unsecured debts between 12 to 36 months.
More....There are, however, some warning signs which you should look out for when contacting a debt settlement company. The following will help you stay clear of the cowboys:
Told to stop paying creditors?
Debt help companies may instruct you to cancel your repayments until they process your information. Only if the company is forwarding payment to the creditors immediately, should you ever consider canceling repayments. If you cancel prematurely, creditors will start informing credit bureaus that your payments are late/missed, causing more damage to your credit status.
‘Non-profit’ debt settlement companies
If you have seen ads for debt settlement companies, you may have noticed many claim to be not-for-profit organizations. While some are legitimately non-profit companies set up to help consumers, many will simply use this as an excuse to charge higher fees.
There are many debt settlement firms who charge low fees to help you get out of debt so do some homework first.
Debt repayment uncertainty
If your credit counselor or debt settlement firm are making payments on your behalf, make sure you have all the details nailed down. A warning sign that a debt settlement agency is on the make is when they are vague on the subject of who your repayments are going to, when and how much. Run for the hills should you have any doubt about the credibility of the debt agency, or better yet, take your business elsewhere.
Get a contract in writing
It seems obvious but always study the terms and conditions of your contract with your debt settlement agency. If they are reluctant to offer a written agreement at the outset, chances are they will not run an honest business.
Credit history repair
A debt settlement company cannot legally repair your credit history without you getting a new social security number and committing fraud. Avoid jail and unscrupulous debt agencies that claim to be able to correct your credit report with a magic wand.
Make yourself at home in our Forum and find out what everyone else thinks about debt settlement in America. There is also our up-to-date News section for all the latest on personal finance. If you need help finding a provider or would like to review a company, please don’t go without checking out our A-Z directory.
