January 22, 2010
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Can You Afford Debt Settlement?, Pt.1
Take your suspicions seriously.Debt settlement companies have become less reliable in recent months as attorney generals have been uncovering deceptive practices which have cheated credit card customers out of millions of dollars. The Better Business Bureau (BBB) says that consumers should be cautious when talking to debt settlement companies. Some debt settlement companies claim they can reduce the individual's credit card debt by as much as 70 percent, charge a large upfront fee, and then collect payments directly from the cardholder telling them that they are saving the money for negotiation leverage. What really happens is that the company charges stiff monthly fees that absorb most of the money while the credit card company continues to tack on additional late fees. In the end, no negotiations have been conducted and the cardholder ends up owing even more than he started with.
To make matters worse, while the credit cardholder waits for relief, their credit score takes a fast dive to subprime levels. According to Amanda Tietze, a BBB representative, cardholders can help themselves and avoid putting themselves at risk for fraud by following a few simple rules. It's important to note that not all debt management companies take advantage of Americans already suffering under the burden of credit card debt. There are some reputable firms and looking for the red flags can help determine if they are legitimate. You should be suspicious of firms that:
• Tell you they can get rid of your negative credit score.
• Tell you your credit score will not be affected if you negotiate debt settlement.
• Charge large upfront fees.
• Tell you that your credit card companies will not sue.
• Tell you they will eliminate all your credit card debt.
• Tell you to stop making payments and ask you to make monthly payments to them prior to any settlement agreement with your creditors.Dealing with a debt settlement firm is not always your best option. You have some other choices. Read part two to learn more on how you can help yourself.