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The Realities of Debt Settlement

If you find yourself in a large amount of credit debt, the idea of using a debt settlement company to help you get out of the red may sound like a good idea. They make it seem like they are there for you and will work with you to manage your debt balance. In some cases, using a debt settlement company can be a good option, but make sure to know what you are getting yourself into before you make that choice. Credit card companies normally are just as willing to work with you even if you owe large sums, as it is ultimately in their best interest for you to be able to pay back as much of the balance as you can.

Facts on Debt Settlement Companies

  • Credit card companies generally do not have special discounts that they only allow to debt settlement companies.

  • They are for-profit and normally charge between 20% and 25% more than it would cost you to pay off your debt through the credit company alone.

  • Normally, you are told to stop payments to the credit company when starting with the debt settlement company. This may cause additional accrued interest and can have a negative affect on your credit score.

Other Options

  • Most credit card companies provide alternative repayment options for individuals struggling to pay what they owe.

  • Many credit card companies will offer loss mitigation options that will allow for a reduced interest on payment or delayed payments for several months until you can start making payments again.

  • If you can’t pay the balance you owe in a certain timeframe, some credit companies will allow you to negotiate and settle your debt for less than you originally owed.

  • Important to note: make sure to get any changes to your payment agreement in writing.

Take Away

Using a debt settlement company may be a helpful option for you depending on your circumstances, but just make sure you read the fine print and fully understand what you are committing to. A good option is to try and work out a repayment plan with your credit card company first, then turn to a debt settlement company if you still cannot manage to find a plan that will allow you to pay off your balance in a timely manner. Regardless of your decision, make sure you completely understand all rates, payment structures, and timelines, and have all agreements in writing.

If you have credit card debt and you are falling behind on payments, you may have options.  Credit counseling, debt negotiation, and debt defense are just a few things Elias Dsouza of Dsouza and Strachan Lawgroup group can help you with.  Elias has the skills and experience to guide you through the debt resolution process.  Contact Elias today for a free consultation.

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