Is a debt settlement program a good idea?
Is a debt settlement program a good idea, compared with using a Consumer Credit Counseling group, or Debt Consolidation?
Posted August 18th, 2010 in Debt Settlement. Tagged: consumer credit counseling, debt consolidation, debt settlement program.
Debt settlement/consolidation firms have you deliberately default on your credit cards to settle for less. When you use such a firm, the monthly payment you make is going towards their settlement fees and to build a settlement account. Their fees are taken out first. Your credit cards will not be paid and will go into complete default during this process, which ruins your credit rating. This is deliberate so that they can attempt settlements for 50%.
People signing up with debt settlement firms often have the mistaken impression that their creditors will gladly work with such companies..or that they are obligated to accept settlements…they aren’t. You can never predict how your creditors will respond..they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment. If the process fails you can end up in a much worse financial situation.
If you’re already 3 or more months behind and you have money to offer up front settlements for less, then you can make your own offers. Get all terms in writing first.
If you’re struggling with credit card debt and you’ve exhausted all self help options, then there are really only 2 options: Entering a debt management plan through a non profit credit counseling firm like CCCS. They can negotiate reduced payments and interest but NOT settlements. Referral at: http://www.nfcc.org – If this does not work out, the other option is Chapter 7 bankruptcy.
August 18th, 2010 at 11:48 pmYou can settle a debt directly with the collection agency. As a rule, they will accept close to half of what you owe. You dont need an intermediary.
August 18th, 2010 at 11:48 pmGood day,
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August 18th, 2010 at 11:48 pm