Debt settlement/debt negotiation programs

Debt settlement/debt negotiation programs

Debt settlement/negotiation differs greatly from credit counseling and debt management plans (DMPs). It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit. That’s why many states have laws regulating debt negotiation companies and the services they offer.

When looking for debt help make sure you go to a full service financial solutions company that offers credit counseling and DMPs and debt settlement services. By doing this you will get the true fact on both debt consolidation services and will not be pressured into enrolling in a program that will not be beneficial to you.

Claims made by debt settlement companies

Debt negotiation firms may claim they’re nonprofit. They also may claim that they can arrange for your unsecured debt — typically credit card debt — to be paid off for anywhere from 10 to 50 percent of the balance owed. For example, if you owe $10,000 on a credit card, a debt negotiation firm may claim it can arrange for you to pay it off with a lesser amount, say $4,000.

The firms often pitch their services as an alternative to bankruptcy. They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete their debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company. The firm may promise to hold your funds in a special account and pay your creditors on your behalf.

The True Facts

• If it sounds too good to be true…chances are it is!
• Just because a debt negotiation company describes itself as a “nonprofit” organization, there’s no guarantee that the services they offer are legitimate.
• There also is no guarantee that a creditor will accept partial payment of a legitimate debt.
• If you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to increase.
• While creditors have no obligation to agree to negotiate the amount a consumer owes
• Non-payment of you accounts will have a negative impact you your credit
• Creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.
• The Internal Revenue Service may consider any amount over six hundred dollars of forgiven debt to be taxable income.

Damage Control

Debt settlement is a viable option for reducing and eliminating your debt. Turning to a business that offers debt help solutions is a solution when your bills become unmanageable, if you turn to a reputable company. Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt settlement.

Most debt negotiation companies charge consumers 15% of the amount debt being placed for settlement. They also charge a monthly service fee that ranges from $49 to $79. The majority of companies/attorneys do not offer full representation. Example: if you get sued a traditional debt settlement company cannot represent you on that lawsuit. And most debt settlement attorneys have a clause in their agreement stating that they will not represent you in court if you are sued but they will try to settle the account outside of court.

Be forewarned most companies will place you with an attorney that does not offer you full representation. This means– if a creditor files a lawsuit against you, you will not have attorney representation on that lawsuit in court. The truth of the matter– this is when you need your attorney most!

Creditors are becoming more aggressive in their collection efforts and are more likely to file suit to recover their money. Therefore, you need a debt settlement program that offers full representation and if you are speaking with someone who does not offer full representation, look elsewhere for a service provider!

If you are interested in debt settlement with full representation expect to pay a fee equal to 15% of the total debt being placed and a monthly maintenance fee ranging between $79 dollars per month.

• The attorney representing you has an office in your state
• You are signing a contract with the attorney or his/her paralegal in the attorney’s office
• Contact will be initiated with your creditors within 30 days of your enrollment
• Your attorney represents you on lawsuits filed by you enrolled creditors
• Your attorney represents you Fair Debt Collection Practice Act (FDCPA) Violations
• You must have full representation from an attorney within your state! Otherwise, the likelihood of you being successful in debt settlement will be very slim.

If you’re thinking about getting debt help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully. You can start by clicking here or calling Total Debt Relief, Inc. toll free 800-627-9667 and get a complete financial analysis and find out if credit counseling debt management plan or debt settlement is right for you.

Total Debt Relief, is one of the only financial solutions companies offering a variety of consumer and business debt solutions.