Debt Settlement Companies – It is Absolutley Shocking What They Don’t Tell You

Giving some thought to contracting with one of the debt settlement companies or debt consolidation companies because you believe they will help you to save money on your monthly payments and get you out of debt faster? If you are make sure to thoroughly research them before you sign a contract because there are an awful lot of scams out there and you can end up in worse shape than you are now.

Did you know that a debt consolidation company is not the same as a debt settlement or debt negotiation company?

What surprises a lot of people is that although many credit debt settlement companies call themselves non-profit, they charge several hundred dollars as an inititiation fee just to set up your account. And, on top of that, they charge a monthly service fee that's determined by the amount of money you owe. It sounds like they're making an awful lot of money for a company that's supposed to be non-profit.

Let's take a look at what's supposed to happen.

A debt settlement company will pay your loans out of a trust account that they have set up. That's true.  It's a fact. The problem arises from the amount of time it takes before they make those payments.

What's amazing is that even though you pay your debt settlement company money every month they aren't necessarily making monthly payments to the people you owe money to.

After they put your money into a trust account they negotiate your debts with your creditors. Then, when there's enough money in the trust account, they will make a lump-sum settlement with your creditor.

This might sound good in theory. In reality, it can take years for you to build up enough money in your trust account to pay off every one of your creditors. In the meantime your creditors can sue you and they can garnish your wages.

And while the negotiations are going on, your debt will increase because debt settlement companies don't arrange to stop interest, late fees, or over limit fees with your creditors.

So you might end up being sued.

If the judgement is against you you will end up owing more money than you did before you hired the company.

And to pour salt into your wounds, most debt settlement companies don't tell you any of this before you sign a contract with them.

So What Can You Do?

As an alternative you can negotiate with your creditors yourself or consider working with a debt relief consolidation company. Negotiate for yourself and don't be surprised if a lot of your creditors agree to take smaller monthly payments.  And, they might even stop both your interest and your fees from piling up.

If you do this to get out of credit debt, you'll save the money you negotiated and also save the money you would have paid a settlement company.

If you've already gotten involved with a settlement company and things are not working out to your satisfaction most of them will let you cancel your account and get a refund of what you've paid to them. Less their non-refundable monthly service fees and administration fees, of course. That's true for the "non-profit" companies also.

If you do decide to sign up with any service, be cautious. Ask questions. It they avoid answering your questions or if they give you the run around, move on to a different company. There are some legitimate debt settlement companies that actually do help people. But you might just have to sift through a number of them until you find one that you're comfortable with.