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.