When you are actually asked about debt settlement, most of you might cringe. Some of you might even gird for that frustrating discussion with some of the desperate debtors, who are actually looking for a certain quick fix to the problem they have been creating for several years now. They are here to get rid of the debts as easily like the baking potato in the microwave. Those even want the calls and letters to stop. They are in need of ways to get rid of the stress they are currently going through and experiencing.
That’s when they are drawn right towards the idea of debt settlement companies, as they want to believe and trust the ads they have seen so many times. They have already claimed through those ads that these companies can reduce the debt you are in at a significant rate for few pennies on the dollar. You might have come across similar ads like this one where the firm promises that if you owe $30K, you can easily resolve the debt in as little time as 24 to 48 months.
Such statements come in fine print caveat which talks about the fees, and the fact that clients are still paying around 75% of the money they actually owe. Moreover, if you go through the fine prints and read those carefully, you will see that these firms are not actually guaranteeing any program that might work. You will get to learn a lot more about that from debt settlement ratings, right away.
The real deal for people to know:
Going through the points as mentioned above can solve a great deal of results just for you. Nuking most of the debt away in some short order is always a pipe dream for most of the people out there. Just around one in 10 customers are here to just participate in these debt settlement programs, which can end up in a debt-free manner and in a promised time frame. It is mainly according to the consumer alert, as issued by the nonprofit organization or National Association of the Consumer Bankruptcy Attorneys.
- Debt settlement firms will always promise to act on behalf of negotiating with the creditors, with the idea to just reduce the debts. Most of the time, customers are often told to just stop paying bills and instead just send money to some of the debt relief firms. Those options can actually hold on to the money with the main intention of offering these creditors lump-sum offer for less than what is owed.
- Bombarded right with false web advertising promises and slick radio has paved a road to being debt free in a less period of time. Obviously, there are some companies, which you can trust without any fail. However, those are only a handful. The rest of them will only target those desperate victims of an economic downturn. These particular groups of vulnerable consumers will end up sued, sticking with some of the outrageous fees and even more deep within debt. In terms of credit scores, their conditions are way off and far worse than what was before.
Some problems to be noted down:
If you want to know more about the debt settlement programs, then you better check out the problems involved first. That will help you realize if you actually want to get to this point or not. One major problem with the debt settlement program is that it encourages consumers to default on debts. If you are clever enough, you should not work on that at all. Going through some cases as examples might work out brilliantly in this regard for sure. These examples are from the associations, which are ready to help you big time.
- It was noted once that a Florida couple was around $60K in credit card debt and California retiree was up with $79K in the bills.
- Under the program, the debt settlement firms told the Florida couple that they have to pay a sum of $31,200, which will include the fees of the firm, for freeing them from the debt related situation and end up with a savings of around $28,800.
- Here, the firm was clever enough to take an upfront fee of around $6900 and end up starting to collect money on a monthly basis of first $460 and then reducing the amount to $230. The couple failed to catch up with the payment as asked for and eventually, never got any form of debt settlement.
- According to the case of the California retiree, the 77-year-old man said that he was watching TV and saw the commercial for debt settlement firm, claiming the team can reduce debt by 50%. At that time, the company started taking $1800 on a monthly scale out of the retiree’s bank account.
- As the retiree started going through the contact, he realized he might have to pay 15% of the gross amount or even closer to $12000 upfront of the $1800 mark before trying to settle any debt. So, unfortunately, he ended up paying the debt settlement firm a whopping amount of $25,200, before he realized. None of this debt was settled.
Under the federal rules:
As per the federal rules placed 2 years ago, it was aimed at reining in some of the bad players in the industry and now making the same illegal for the debt relief services just for charging the upfront fees. Companies have the right to sell their solutions over the phone but will not get paid until they have helped in reducing or settling the credit card debt of the consumer or other forms of unsecured debt successfully.
It is always the duty of the companies to make some special disclosures to the current potential customers. They have to mention the time they might take for covering this task, the cost of the service and potential negative consequences resulted from seeking the current debt relief. The firms are prohibited from misrepresenting what they can work for the debtors.