Debt settlement and consolidation companies - How you are kept in the dark

[ Bookmark this page! ] [ get HTML Version ]

Debt consolidation and debt settlement is a big industry. Any big industry will attract a set of individuals who are interested in your money without providing good service in return. When you lack enough research before seeking debt consolidation, you may be in for the ride. Get acquainted with common glossary to help understand debt consolidation and debt settlement. Understand and do enough research on debt consolidation before you plan to consolidate your debts for a better future. Some firms and TV ads will make you believe that debt consolidation can be achieved within a matter of months. However, even the most persistent effort will wipe your debt in a few years and not a few months. As easy as it is to get into debt, it is very difficult to get out of debt.



Best Assistance For Your Debt Problems
Life is a game with money. It has the power to make one rich and make one poor. It is the soul foundation for one's happiness and sorrow. Moreover, truth keeps silent when money speaks as it is the wise man's religion.

No one is satisfied with the money he earns. Desire drives his every movement and controls the pace of his dreams. When need becomes the king, and when necessity rules o... Read debt consolidation article



Debt settlement and consolidation companies - How you are kept in the dark
If you're thinking about using a debt consolidation or debt settlement service to help you get out of debt faster and save money on your monthly payments, make sure you do your homework before choosing a company. There are definitely shams and scams out there.

First let me say that debt consolidation is *not* the same as debt settlement/negotiation, which most people don't realize.

Debt settlement companies charge hundreds of dollars as an initial "admin fee" to set up your account, plus a monthly service fee. The fees vary depending on the company and the amount of your debts.

Such companies take your money every month, but don't make monthly payments to your creditors! Instead, they put it in a trust account, negotiate your debts with your creditors, then make a lump-sum payment when there's enough in your account to pay a creditor in full.

That can take *years* depending on the amount of debt you have with each creditor. Meanwhile, you can be sued by your creditors and your wages can be garnished! (Or just don't make payments to your creditors. You'll end up in the same spot without paying someone to help you get there!)

Settlement companies don't ask your creditors to stop all interest, late fees and overlimit fees from accruing. That means while the negotiations are ongoing, your bills will continue to grow! So if you're sued and a judgement is brought against you, you'll owe more money than before!

And shoddy companies, which there are alot of, don't tell you *any* of this up front. I call it "getting permission by ommission" because they simply don't tell you how their program works *before* you sign an agreement with them. Or after, for that matter. But if you ask the right questions, eventually you'll figure it out. (Or when the crap hits the fan. Whichever comes first.)

Let me give you an example of how debt settlement works.

Let's say you have $20,000 in unsecured credit card debt. You owe $10,000 to one credit card company, $6,000 to another and $4,000 to a third. You agree to a 5 year plan where you pay $250 a month to the settlement company. (After all, $250 a month for 60 months is only $15,000, so you're saving $5,000 and you'll be debt-free in 5 years, right?)

The admin fee will cost you $750. Your first 3 monthly payments go towards that and nothing gets put into your trust account until your 4th month.

The settlement company keeps $50 of your $250 payment each month for the service fee. That means $200 a month is being added to your trust account.

Most debt settlement companies claim to be able to negotiate your debt for about 50% of what you owe. So let's use the lowest credit card debt as an example.

If you owe $4,000 and your creditor agrees to accept $2,000 as payment in full, it will take 10 months at $200 per month to have enough in your trust account to pay off just that one credit card.

But remember, your first 3 payments to the settlement company only paid the admin fee. That means your first credit card settlement is 14 months *after* you started sending them money.

So what's the problem? It's simple. Your creditor won't agree to accept half of your actual debt unless, or until, it can be paid in full. Otherwise, you're expected to make your normal monthly payments.

Since you don't have $2,000 in your trust account, and you won't have it until more than a year after you stopped paying your creditor directly, they'll probably take you to court and request that your wages be garnished long before you have that $2,000 built up.

And what about your other creditors? Well, they'll be waiting even longer to get their money from the settlement company. The $6,000 debt will take 15 *more* months to pay off, assuming your creditor waits that long and agrees to 50%. And that $10,000 bill? You do the math.

On the other hand, if you signed up for a 3 year plan with the settlement company, your debts would be paid off sooner. But, the question is, will your creditors wait that long? Probably not.

The facts are, you can negotiate with your creditors yourself. Most will agree to take a smaller monthly payment from you and stop all interest and fees from accruing. And, of course, you'll save thousands of dollars in fees to a settlement company.

Before signing up for any service, please be sure you check out the company thoroughly. And don't let the words "non-profit" fool you either. Alot of debt settlement companies claim to be non-profit.

Going back to the example above, if you pay them $15,000 over a 5 year time frame and they settle your debts at half of what you owed, they'll make $5,000 from you. I'd call that a profit, especially since they might not have actually helped you in any way.

Most companies will allow you to cancel your account and get a refund of what you've paid, less the non-refundable admin fee and the monthly service fees. If you feel you've been mislead about their program, don't hesitate to argue til the cows come home. File a complaint with the Better Business Bureau or hire an attorney if you feel you're getting nowhere.

You can visit the Better Business Bureau's website (http://www.bbb.org) and find reports on hundreds of companies. Here's a small listing of companies that have poor reputations with the BBB:

National Consumer Debt Council LLC - Irvine, CA (A.K.A. NCDC, United Consumer Law Group)

Financial Rescue Services - Burbank, CA

Debt Legal Services - Anaheim, CA

American Debt Relief - Los Angeles, CA (A.K.A. A M Debt, American Debts Relief, Debt Relief)

Please be very cautious when choosing a debt help company and ask lots of questions before agreeing to anything. If you find they're evading your questions, run fast and run far. There are reputable companies out there, so keep looking until you find one.

About The Author

Denise Hall is the owner of Home Business on a Budget which specializes in tools and resources for your home business needs. Visit http://www.home-business-on-a-budget.com today. Subscribe to Home Business on a Budget Newsletter for weekly articles, tips, information and resources. To Subscribe mailto:hbb_newsletter@a1ebiz.com

If you would like to receive her new articles when they are written, please mailto:denise_hall@freeautobot.com

This article may be reprinted in its entirety with this resource box included, please send and email to: dmh0226@voyager.net

What do you want to do?
Bookmark this page before you lose it
Search this site for FREE information
Help spread the word. E-mail this page to a friend

Debt consolidation program - All you need to know

Debt consolidation programs are devised to get you out of debt in the quickest and most inexpensive manner possible. When you sign up with a debt consolidation manager they will work with your creditors to combine all your debt and lower your monthly payments. It is a debt settlement arrangement that works by lowering your interest rates and forgiving your late fees thereby lowering your monthly payments.

When you are approved for a debt consolidation loan all of your debt will be combined into a single monthly sum. This payment is then split up and distributed between all of your creditors. You will pay one simple low interest rate on this amount as opposed to the several different high interest rates you were paying before. A debt consolidation loan is an excellent way to avoid extreme debt relief methods such as bankruptcy. You will need collateral when applying for a debt consolidation loan, how much will be determined by how much you need to borrow.

Banks and creditors look upon debt consolidation loans favorably because they realize you are taking positive methods to repay your debt. The majority of creditors are willing to work with debt consolidators in lowering your monthly payments or interest rates because they see this as an opportunity to have debts paid in full and in a timely manner. Debt consolidation loans are helpful aspects of improving your credit history. When you pay off your debt you will often earn more credit and higher credit ratings.

There are several different debt consolidation services on-line today. 7debt.com lists seven of the best agencies advertising on the net. ADNSgroup of the National Legal Debt Centers ranks as number one on their list. There is a $20,000 minimum debt required to apply. Achieve Financial Security ranks in at number two with a $10,000 minimum debt required to apply. USAconsolidate.com is number three, has no minimum debt required and gives you the option select consolidation or settlement. CareOneCredit ranks in at number four and has a $2,500 minimum debt. CuraDebt is number five and has a $10,000 minimum debt requirement. FamilyCreditHelp ranks as number six, has no minimum debt requirement and specializes in helping you free up extra cash. Last but not least on the top seven lists is DebtAdvocatesOfAmerica with only a $5,000 minimum debt requirement.

Timothy Gorman is a successful Webmaster and publisher of Debt-Relief-Solutions.com. He provides more debt relief, credit repair and free debt consolidation information that you can research in your pajamas on his website.


Top rated articles for debt consolidation

1. Steps to Get Out of Debt
Step 3 - Analyze Your Debt

The next step is to figure out exactly how much you owe. First, make a list of every debt you have. Not just credit cards, everything. Credit cards, department st... Read debt consolidation article

2. Consolidate debt and be debt free
Will you agree with me if I tell you that, the key to financial success is to live within your means? This is an old belief that modern day income earners have completely forgotten. This is because it... Read debt consolidation article

3. Reducing Debt - How to Avoid the Pitfalls of Creeping Debt
Reducing debt usually isn't a high priority for people until they have already gotten into trouble with overspending. Using a few basic guidelines, and debt calculations, can help you see when your de... Read debt consolidation article

4. Debt Free Software
Debt free software allows people to find ways to get out of debt within a few years. There are different types of software available for becoming debt free. Of them, the Rapid Debt Reducer(tm) softwar... Read debt consolidation article

5. Online debt management
Online debt management programs can help you get out of short term debt in five years or less. They can also help you create financial goals and a livable budget. With credit counseling, you can start... Read debt consolidation article

6. How to Pay off Credit Card Debt
When considering many of the inventions that we use regularly, the credit card is a relatively new idea; the first credit card that could be used at more than one merchant was issued in 1950. Frank Mc... Read debt consolidation article

7. Online Debt Consolidation Loans - Fight Debt
Are you tired of being swamped with bills from different creditors each month? Definetely, you must be. Dealing with a number of lenders at a time is a tiring job. Remembering whom to pay and how much... Read debt consolidation article

8. How to Beat Debt
Debt is a Product in America

The #1 sickness in America concerning finances right now is debt. Debt is a product in our culture and it is vigorously aimed at you and me everyday, everywhe... Read debt consolidation article

9. Debt counseling and frugal living
The opportunities for spending money nowadays are unlimited. Too many people find themselves too strapped to pay their bills on time and complain when their bi-weekly salary is paid a couple of days l... Read debt consolidation article

10. Debt Management - Making the right choice
Debt Management plans offer credit counseling clients a different and new approach to tackle their finances. Finding out if a debt management plan is right for you can take some time. However looking ... Read debt consolidation article

1. Bad debt - A primer
2. Credit counseling - Get in line now and avoid the bankruptcy rush
3. Debt Recovery and Solutions
4. How to Get Out of Credit Card Debt
5. Best Assistance For Debt Problems
6. Tips on avoiding post holiday financial blues
7. How to Eliminate Credit Card Debt Without Bankruptcy
8. How to reduce your credit card debt
9. How to deal with debt stress
10. Debt consolidation and its benefits

Debt consolidation, debt counseling and debt management in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi,



Debt settlement and consolidation companies - How you are kept in the dark
Debt consolidation, debt counseling and debt management services in Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania,

Debt management, debt counseling and debt consolidation in Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin and Wyoming.