Can You Trust A Debt Relief Service?

27
July

Dealing with a major debt can leave you in a desperate situation. Your creditors are calling you almost everyday wondering when the next payment will be coming in. A debt relief company may be your only option to help you get out of debt. However, can you trust these people to successfully resolve your debt crisis? The answer may not be as simple as you think.

Debt Relief Companies Have Relationships With Your Creditors

Think about that heading for a second. The people you are paying to help you out have relationships with your creditors. This means the people you are trusting to help you may have incentive to hurt you. Many debt relief services have special deals in place with most major creditors. They will often times receive a portion of any debt not waived during negotiation.

For example, say a customer had $10,000 in credit card debt. Your creditors may be willing to cut that amount down to $5,000. However, your debt relief company only negotiates it down to $6,000. Your credit counselor might get a cut of that $1,000 that wasn’t settled.

There Are A Lot Of Fees

Many debt relief companies claim to be non-profit. Do not be fooled by this moniker. These companies are certainly making a profit. They are making a profit because they charge you a lot of money to use their services. Among the fees you can expect to pay are:

-Enrollment Fee

-Monthly Account Maintenance Fee

-Settlement Fee

You may have to pay a certain percentage of your debt just to enroll in the program. Most people will pay again once the debt is settled. The average fee is 10 percent of any amount settled. Your fee would be $1,000 for every $10,000 settled. Some companies will also force you to make donations or pay for debt relief classes on the side.

Most Companies Just Want To Make Money

Always check with a local consumer group before enrolling with a debt relief company. Some of the plans they enroll you in do not work in your best interest. Instead, you are being funneled into a program that is most profitable for the company.

You can tell if the company cares about your needs based on the initial consultation. A company that cares about you will take the time to determine your best course of action. Some people should not be using debt management as a form of debt relief.

A segment of the population should head straight to bankruptcy court without a second thought. Others should think about other ways to catch up on their debt payments without ruining their credit. Using a good debt relief company will guide you toward the way that works best for you.

Don’t rely on other people to make decisions for you. This is especially true if you are in a desperate situation. Always do your own research before enrolling in a debt relief plan. It isn’t a good idea to take advice from someone who may be in bed with your creditors.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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