Are you considering hiring a debt settlement company to help you with your debt problems? Before doing so, maybe you should read this article as it might save you a lot of money and frustration.
One of the reasons that many consumers hire a debt settlement company is that the amount of their debts has become simply unaffordable for them and they would like to avoid bankruptcy as much as possible. They see an ad from a debt settlement company on TV, in newspapers or on the Internet and it promises to get them out of debt for “pennies on the dollar.” These consumers are fed up with the fact that the credit card companies have raised their interest rates to 28-30% and they find that with these sky-high rates they are forced to stay in debt forever. Hiring a debt settlement company therefore seems like an attractive option. Unfortunately, for many people, this becomes their worst nightmare.
FACT: Most people who enroll in a debt settlement program are usually sued by one or more creditors before their debts are actually paid. As their accounts are collected, their credit continues to be trashed by the credit bureaus and they continue to receive collection calls from their creditors despite the fact that they have hired a debt settlement company. And when they are sued by a creditor, it is only then that most people realize that the debt settlement company is in fact unable to protect them. It was often in the written agreement that they signed with the debt settlement company, but by the time they signed up for the program, most people didn’t even read or understand what they were doing. had signed. They were just desperately looking for a quick fix so they rushed to sign up.
WARNING: When talking to a debt settlement company, be extra careful because many companies just want to make money out of your misfortune with no real intention of helping you. They will say whatever you like so they can sign up. Their usual tactic is to set a monthly payment amount at whatever you want. They set the payment at a very low level but extend the payment period, usually 3 to 5 years. For most creditors, this extended period is unrealistic and many of them will refuse to work with the debt settlement company and sue you instead.
Many debt settlement companies also tell you that once you register with them, they will stop all collections against you. Usually they will ask you to send a “stop and abstain” letter to stop all harassing letters and phone calls. When this happens, it leaves the collector with no other way to contact you to collect the debt. So at this point, they will just serve you legal action and bring you to court.
There are legitimate debt settlement companies out there, but you need to do your homework. Check with the Better Business Bureau and find out how long the company has been in business. If the company you hire is a law firm, check with the state bar if there have been any complaints against any of the firm’s lawyers.
In my opinion, debt settlement can be a good option in cases where bankruptcy is not recommended, but from what I have seen these cases are rare. Bankruptcy is often a faster way to get out of debt and rebuild your credit in a much shorter period.
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NOTE: Due to the COVID-19 pandemic, I am offering free PHONE consultations to anyone who needs help dealing with their debt issues.
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None of the information in this document is intended to provide legal advice for a specific situation. Atty. Ray Bulaon has successfully helped over 5,000 clients get out of debt. For a free legal assessment of your situation, please call RJB Law Offices Toll Free at 1-866-477-7772.