subject: What You Should Know About Debt Settlement Services [print this page] Debt is huge these days and it seems like you can't turn on the TV or listen to the radio without someone telling you that it is your right to pay less than what you owe on your credit cards. While it is possible to settle your debts for less than what is owed, it is not as easy as deciding you will pay less, writing a check and walking away. And when it comes to services that assist in debt settlement, great caution should be used.
The truth of the matter is these services are expensive and they don't do anything for you that you cannot do on your own. Many lenders will not even deal with these companies. I have seen instances where credit card companies receive letters from debt settlement companies and they are immediately turned over to their legal department for processing.
Debt settlement companies are service organizations that negotiate with your lenders to have the balances on your credit card reduced. These organizations are not nonprofit organizations and they are generally paid 15% to 25% of the amount of money that is forgiven on your credit card balances. The bottom line is you can do this negotiating without the help of a service and it will not cost you a thing.
It takes no special skills to be able to talk to your lenders about settling an account for less than what is owed, but most lenders will not settle until several months have passed without a payment. If you do make a settlement arrangement with a company, make sure get everything in writing, be prepared to make payment within a few days of the arrangement and get a release of debt document. Make sure you keep all documents in a safe place. Chances are good that someone may try to collect on the balance of the debt.
You may want to check into consumer credit counseling before you consider debt settlement. This option has less of a negative impact on your credit and can be used on debts that are current or a few months past due. This alternative will allow you to consolidate most unsecured debts without a loan. There are also a number of other advantages to using a debt management plan to repay your debt.
Debt can be a huge source of stress, but before you jump into the first program for debt relief that comes along, it is important that you completely understand how it works and what its drawbacks are. A nonprofit debt management company is a good start, because they work with a number of other debt relief companies and have access to several types of debt help. Get a free quote today for getting out of debt!
