There are numerous debt settlement companies offering services that make debt settlement harder. Several of them may put you in deeper debt, even if you have a reasonable amount of credit card debt.
Without asking for any money upfront
One common practice is for creditors to offer settlement on your account without asking for any money upfront. However, this would mean that they are holding you liable for a debt that they will not be able to collect. This is why they offer lower balances and shorter terms.
When payments are late and your bills are all accumulated together, a creditor will reduce your balance in order to keep you from paying the full amount. If your payment is also late, they will reduce your payment again. You are then further pushed into having to pay even more than the original balance.
Credit card debt and personal loans usually go on for several years, but with debt settlement you have to pay it off in just one year. This means that your credit will suffer, and so will your ability to borrow when you go to get a loan in the future.
Begin collection efforts at this point
The debt settlement company is likely to begin collection efforts at this point. They will begin by contacting your former creditors and making you agree to have the accounts referred to the settlement company. They will contact all of your current creditors and threaten them with legal action if they do not pay.
Next, they will get a new account opened with the credit card company and continue to have collections calls. When they do not pay, they will continue to move the account to where they own it. They may even freeze the account or deny the bill altogether.
Once you become aware of the collection efforts, you can ask for help from a professional debt relief service. Debt settlement professionals know all about what your options are.
These settlement companies can negotiate with the collection agencies and gain your payment while lowering your balance. They can stop the threat of court action.
Credit report will show the debt has been settled
When you file bankruptcy, your debts are placed in a consolidation company’s name and they send you letters threatening you with court action if you do not pay. With debt settlement, you do not need to worry about this, since your credit report will show the debt has been settled.
Debt settlement agencies can keep your payments current and avoid the collection calls. You will be able to keep paying the settlement company the entire amount owed without the need to fear losing your home, car or anything else because of a large debt. You will only pay the amount that the debt settlement company is willing to negotiate for you.
The key to getting the best settlement possible is to contact the settlement companies that offer the best settlement rates. They can negotiate better deals than other companies. Therefore, you should use one that charges the lowest rate.
If you can, find a settlement company that is affiliated with a reputable credit counseling agency. These types of agencies are excellent because they will often work to consolidate all of your credit card debt into one affordable monthly payment.