What are the drawbacks of using a debt consolidation company to settle your credit card debt?
Posted September 4th, 2010 in Debt Settlement.
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I somewhat agree with CatDad, but remember there are legit settlement companies out there that have 0 complaints. What differentiates legit and ethical debt relief agencies is their fee structure. Personal Credit Solution does not a charge their clients even a penny up-front nor any monthly fees. Their fee is solely based on what they save their clients once a settlement from their creditors has been reached.
They also offer other alternatives to bankruptcy so that clients are given unbiased information about their options. Personal Credit Solution also explains the pros and cons to each debt relief program available to their clients, so that they may weight their options informatively.
Keep in mind, if any of their clients accounts get transferred to a law firm they make sure to assist the client at no extra charge until an offer is made on the account and paid off. This happens to less than 1% of their enrolled accounts.
The best way to be safe when joining any settlement company, is to not agree to any up-front fees most settlement companies charge. Make sure the agency provides the service they promise first and only then should they charge their fee. It is also wise to look into a settlement company that only charges their fee based on what they save you once an offer has been agreed with your creditors. Personal Credit Solution will also make sure you are fit for the settlement program upon reviewing your budge, since your accounts must be fully settled for them to receive a penny.This will ensure you receive full assurance that your accounts are being taken care of, another reason why Personal Credit Solution offers a full satisfaction guarantee to each and every client of theirs.
September 4th, 2010 at 9:25 pmthey charge a fee as well. if you pay an additional $20 on your card a month it will take 3 years to pay off $1,000 of debt.
September 4th, 2010 at 9:25 pmfor one thing, all debt you have afterward will be high priced … every possible creditor will be on notice that you have trouble paying on time [or controlling spending] and so they’ll demand higher interest rates for anything — cards, car, house, boat, etc.
September 4th, 2010 at 9:25 pmMost of your debt consolidation companies do not do what they promise. If they say they can wipe debt from your credit report for a fee, it is a scam! Do not fall into this category of being a victim. The only true way to lower your debt is to contact the companies yourself and get put on a payment plan with them until the debt is resolved. Most companies would rather knock a little off of the interest payments and take lower payments than to have you not pay them at all. They want their money and will usually work with you. If any company wants money to help you out of debt, 99% of the time, it is a scam! I am taking courses through the university of Phoenix and have learned this lesson myself.
September 4th, 2010 at 9:25 pmDebt 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. 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.
Here’s an example of what can happen when you use a debt settlement firm:
September 4th, 2010 at 9:25 pmhttp://www.ripoffreport.com/credit-debt-services/mach-3-debt-solution/mach-3-debt-solutions-my-debt-75a66.htm
Potential Pitfalls Of Consolidating:
September 4th, 2010 at 9:25 pm1. If you default on the loan, your pledged assets will go to the lender to pay your debt off.
2. Typically the time frame to totally pay off your loan will be extended pretty substantially.
3. You may be responsible for penalty fees to your creditors during the application process
4. You will likely end up paying more in interest by the time it is all over.
5. Many people find themselves back in debt quickly due to easily accessible money from the newly paid off credit cards.
6. You may take a hit to your credit score based on whether or not some of your principal was forgiven on certain loans
To discover the fastest, most effective method of eliminating your debt, visit us at:
They charge an outrageous fee for something you could do yourself
They charge an outrageous fee and don’t get your debt *settled*
They charge an outrageous fee and tell you to let your cards go into default ruining your credit
They charge an outrageous fee and tell you you are on your own when your creditors want to sue you for using a debt settlement company
You get the idea.
September 4th, 2010 at 9:25 pm