Are Debt Settlement Commercials Offering A Real Service?
Everyone has seen those commercials where various debt settlement companies promise to help you get rid of your debt for a fraction of what you owe. It seems too good to be true but for those in debt it is something you want to be true. Wouldn't it be wonderful to be able to get rid of your debt and only pay a small portion of what you owe? Are these services real?
Is There Truth To Debt Settlement Claims?
Basically, will a creditor accept less than what is really owed just so that they will get something? The truth is that they might but there is a lot more to the story. First off, debt collectors are not looking to settle.
They collect debts for a living and they do not get paid the big bucks to go around making deals all day long. Their goal is to get you to pay off your debt, your entire debt, and to pay it off now. Settling your debt may be a remote possibility but it is usually the option that is farthest from a debt collector's mind.
What Do Debt Settlement Programs Do?
Debt settlement usually works as follows. You pay a predetermined amount into a bank account or trust account every month. When the amount in this account grows to a large enough size, say 50% or 60% of the total amount owed, then the company that is handling your debt settlement will contact your creditor and offer this lump sum that you have accrued as a way to settle the debt. That's the basic theory. The creditor may or may not accept the amount and there is more going on while this account is growing that you should know about.
What Is The Cost Of Debt Settlement Programs?
Debt settlement programs, a dubious proposition at best, also come with many costs. As you are depositing all that money into an account to build up a lump sum to offer your creditors, your debt settlement company is probably taking their rather substantial fee out of your deposits. You are nowhere near the possibility of debt settlement but the debt settlement company has already received a sizeable payment from you for their services.
And while you are waiting for that account to grow in size, the debt collectors have not forgotten about you. They are going through their usual dance of trying to get you to pay. They are sending you letters, calling you, and moving on to sending you legal letters and then court summons. In fact, your wages could be garnished even as your little debt settlement nest egg continues to grow.
Actually, most debt collectors will not even think about debt settlement until your account is six months past due. This means that you will be enduring the onslaught of debt collectors for at least this long and even after you have the money for debt settlement they still may not accept it as enough to settle your debt.
Debt settlement commercials are offering a real service but it may not be in your best interest. There are many risks that come along with debt settlement schemes and you are probably better off just working to pay off your debt the old fashioned way. At least this way every penny can go directly to paying off your debt.
11th Dec 2011