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HomeBlog Debt ReliefPros and Cons of Debt Settlement Companies
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Pros and Cons of Debt Settlement Companies

May 9, 2012 by Adam Tijerina

If you watch television at all these days, you probably are aware of the thousands of debt settlement companies operating today. If you conduct an online search on any aspect of credit card or other debt, you will find literally hundreds of thousands of websites offering debt settlement services or information. If you are mired in credit card and other debts, you may find it overwhelming to think about how to manage your own debt and probably have questions about the pros and cons of debt settlement companies.

What is Debt Settlement?

First, it is important to understand exactly what debt settlement is and what it can accomplish. Debt settlement is accomplished through skilled negotiations with your credit card companies and other qualified creditors. Debt settlement often reduces your debt, but it rarely eliminates it entirely. Instead, legitimate debt relief settlement agreements may include eliminating or reducing your interest rate, eliminating or reducing your principal balance, eliminating or reducing accumulated fees for a lump sum payment agreement.

Debt settlement is often recommended as only one method of resolving financial problems. Good credit counseling services will also frequently recommend financial management services and debt consolidation services. Although many debt relief organizations recommend debt consolidation loans, we avoid suggesting that as a solution since it places you further into debt.

Cons of Debt Settlement Companies

Unfortunately, the downturn in the economy has lead to the opportunity for many unqualified individual companies to start debt relief companies that actually do not help consumers. Sadly, out of desperation and a true need to find solutions to their credit problems, these predatory companies prey on the financial difficulties of consumers who are at their most vulnerable.

In the past, consumers who worked with disreputable organizations would find themselves charged high up-front fees that rarely resulted in improvements to their debt situation. Instead, they found themselves further in debt and with even more damage to their credit. As a result, the debt relief industry has earned a questionable reputation until recent legal regulations have forced changes in how fees are charged and how debt relief companies operate.

This problem can be countered, however, by utilizing a legitimate and credentialed debt settlement company. We belong to the American Fair Credit Council, the International Association of Professional Debt Arbitrators and the US Chamber of Commerce. As a result, we maintain to professional, ethical and legal standards of conduct. We do not charge up-front fees and you do not pay a fee until we can show results from our efforts on your behalf.

Debt settlement may also initially negatively affect your credit score. However, if you are already making late payments or missing them entirely, your credit is probably already suffering. By working with a legitimate debt relief organization, your credit score should improve quickly once a settlement agreement is negotiated and reached. With that in place, you can then begin the process embarking on rebuilding your credit.

Pros of Debt Settlement Companies

The most simple benefit of working with a debt settlement company is that you will be able to find relief from your unsecured debts. Debt negotiation and settlement is available for both unsecured personal and business credit accounts. It includes:

• Credit Cards
• Medical Bills
• Collection Accounts
• Personal Loans
• Payday or Cash Advance Loans
• Lines of Credit
• Business Debts
• Repossession Debts

Legitimate debt settlement organizations can save you time and effort by working on your behalf. While many consumers believe they can negotiate debt settlements on their own, they frequently discover that it is a frustrating process that produces few results. Many creditors are reluctant to negotiate directly with consumers and only offer hardship programs that last a few months and do not result in reducing your debt amounts.

On average, qualified credit relief counselors, on the other hand, are able to skillfully negotiate with creditors. They are often able to save you as much as half of your debt amount. Debt settlements negotiated by qualified and trained debt relief counselors usually take the form of a combination of lowered interest rates, eliminated or decreased accumulated fees, reduced principal amounts and lump sum payments.

Debt settlement organizations also usually make recommendations for several different debt relief programs to help you get out of your financial difficulties. Once they have negotiated an agreeable settlement, our counselors usually recommend participation in our debt relief program. This program allows you to make monthly payments into an account that is dedicated to your credit settlement payment plan.

If you are struggling to make monthly payments on your unsecured debts, you may benefit from talking to one of our qualified credit card relief counselors. Allow us to help you back on the road to financial recovery by contacting us or filling out the form for a free debt analysis, and we are sure you will be pleasantly surprised with your decision.

Do you qualify for debt consolidation?

Adam Tijerina
Adam Tijerina

Adam Tijerina is a personal finance expert for National Debt Relief, a BBB A+ accredited business offering debt settlement services since 2009. Adam knows a thing or two about debt resolution after successfully settling $43,250 in credit card debt on his own. He has also co-authored two books about overcoming adversity and has been featured on Credit.com and USNews.com. Adam holds a Bachelor’s Degree from Trinity University and lives in Texas with his wife and four children.

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"When I first decided to go with National Debt Relief and I..."

Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/17/2021 Charlotte: Our call may be recorded. What actually made you decide to work with our National Debt Relief as opposed to other providers? GLYNN: Well, when I first decided to go with them and I talked with the representative, I got a favorable impression of him. And since we've gone with him, we've had very good experience with them. Charlotte: Can you tell me about the program that our National Debt Relief signed you up for? GLYNN: It's a debt consolidation program. Took our credit cards and then working to pay them off. So far, they paid one of my wife's off and one from me. Took the harassing phone calls that we were getting and got them to stop and got creditors to wait on their payments so we could get money to pay them. Charlotte: What did you think about the enrollment process you went through? GLYNN: Enrollment process? Well, it was, I guess... Charlotte: Like how easy or difficult did you find the enrollment process to be? GLYNN: It was no [unclear 0:02:52], just what we could do, and looking at our financial situation, what we was able to do. It's just that, mainly, I was the point where I was fixing to go bankrupt and I didn't want to do that. And this was a way to, I guess, not to go bankrupt. But it still left that option open. Charlotte: In what ways would you say that this program has worked for you? GLYNN: Well, I guess the biggest thing is it stopped the harassing phone calls that we have been getting sometimes five or six times from the same creditor a day. It gave us an opportunity of being able to, I guess, set up a fund that we can use to eventually pay off our credit cards and our debts. Charlotte: About how far would you say that you were in at this point? GLYNN: At the time we signed up? Charlotte: At this point right now. About how far are you in the program? GLYNN: Well, it's, [0:05:00] I guess, about -- I would say I think I was like nine months. And like I say, they were able to pay off one of my wife's credit cards and are working on another one and was able to pay off one of my credit cards, and hopefully be able to pay off another one. Charlotte: Walk me through the interaction with your National Debt Relief negotiator. Give me a little insight on what that experience was like with that representative. GLYNN: Well, he helped us go through and get signed up on a program. He helped us with the getting, I guess, a financial report to establish a savings account to be able to use to start paying our debts off. We didn't know what to do or how to go about doing it. Charlotte: Is there anything about your National Debt Relief negotiator that really stood out and impressed you at all? GLYNN: Yeah, his manner and I guess he was polite and he didn't put down on us. And he led us and showed us the direction we need to go. Charlotte: Is there anything about this process that you would have liked to have seen handled differently? GLYNN: No, not really. Charlotte: If you had to rate this experience on a scale of one to five, and five is that you would recommend to friends and one is you were pretty dissatisfied, how would you rate it? GLYNN: I would rate it at a 5. Charlotte: Would it be okay if I posted your comments as a review on our public website for National Debt Relief? They just like to know what their customers felt about... GLYNN: If you think they're good enough to post. [chuckles] Charlotte: I will send over a link so that you can have it as a record for yourself also at glynncoates@gmail.com. How would you say that your life has been impacted by working with National Debt Relief? GLYNN: Well, it's taken off a lot of the burden off that we were under. We was to the point of, "Just go ahead," and getting a lawyer to file bankruptcy. But this has given us an opportunity to pay some of our debtors back. We made the debts under good face and circumstances beyond our control, it got out of hand. And so, we were trying to -- we wanted to pay them back, [0:10:00] or as much as we can so that, I guess, more ease in our minds. Charlotte: If a friend or a family member were asking you about National Debt Relief, what would you tell them? GLYNN: I'd tell them if they was needing, that they were good to work with and they continued to try to help and work with us. Charlotte: Our call is recorded.

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