Settlement Companies

What Do Debt Settlement Companies Do?

If you are thinking about debt settlement, and are considering hiring one of these companies to do your debt negotiation for you, make sure you do your research first.

What do debt settlement companies charge? Debt settlement companies charge varying amounts for their services. Some companies charge anywhere from 15-20% of your overall debt, while others charge as much as 25% of the amount you saved. There may be up-front fees as well as a monthly service charge. The fee structures vary, making it very hard in advance to figure out what you will wind up paying.

Many creditors will escalate their collections proceedings once they find that a debtor is working with a debt settlement company, and even prompt them to take legal action. If you are sued, the debt settlement company will drop your account, as they do not have the right to give you legal advice or represent you in court. If a representative tells you anything to the contrary, ask to see it in their contract–before you hire them!

Many consumers drop out of the programs before the company reaches an agreement with creditors. After spending thousands of dollars in the up-front fees and monthly maintenance, you may find yourself in the same exact position as you were going in.

The far better option to consider is DIY debt settlement.

It could well be that debt settlement is not the right choice for you, but the representative from one of these debt management companies will probably not tell you that. They are most likely working on a commission basis, which means they benefit when they sign you up. Your best interests and your financial condition are not their priority. You will need to do your own homework on which method of debt resolution is right for you.