Debt Settlement is a good option, but here are concerns when looking at companies.

resrev · #1 (**permalink**) 06-17-2010, 02:45 PM

A majority of the debt settlement companies out there are not law firms and do not have attorney’s that see your program the whole way through. Many will claim that they are an "attorney based program", in which they pay an attorney to review your application and approve it but that is it, after that there is no attorney representation for you in the event you get sued. This is one of the major questions you need to be concerned with and need to ask. If you get sued depending on your state the creditors will be going after a garnishment of wages, lien on your property or a judgment against you.

Next main concern is creditor calls. What you need to realize is these creditors do have the right to call you. Now there are companies out there that will send a seize and desist order to stop the calls. What you need to realize is if you were the creditor calling this person to collect on the debt, and received a seize and desist letter to stop calling and you couldn’t communicate with that person then what would you do? Hmmm… Probably file a lawsuit and take that person to court, so now your back to the first concern.

Another concern you need to have is what is reported in your credit report. Would you rather have “settled, settled for less then owed, or paid up less then owed”, or “paid to a zero balance”.

So if debt settlement is the option that you want to take, then what should you do as these 2 concerns address 99% of the companies out there. Well the solution is look for that 1%.

Ask the proper questions. If the question isn’t directly answered with a yes or no then they are probably hiding something. There are companies out there that do operate this industry the right way. I have seen 2 companies that are law firms and they will have an attorney appear in court with you to represent you if you get sued and fight for a debt dismissal. They also monitor your phone calls with you and make sure that the creditors are following the Fair Debt Collections Practices Act (FDCPA) if in violation they would also file a lawsuit against them and get your debts dismissed. They also make sure that it gets reported on your credit report as paid to a zero balance.

Additional things they have, is in house negotiators and bankruptcy services. One of them even has the owners of their company working in the office full time and they also have a weekly radio shows on CBS Radio taking live calls especially in their local community and allowing people to come to their office to assist them.

Make sure you are doing your do diligence and working with the right company so that you are successful.

billb45 · #2 (**permalink**) 07-13-2010, 01:08 PM

Be careful of significant upfront fees.. as initially the payments you make could be going towards debt settlement companies' fees, not the creditors.

ltj2010 · #3 (**permalink**) 07-16-2010, 01:54 PM

This is my story with Credit Solutions a debt settlement company

You have seen them on tv many times before. "Let us settle your debt for pennies on the dollar" They advertise being able to settle for 60% off of what you owe. Sounds like a great idea doesn't it? I went through this disaster first hand and want to prevent anybody else going through it.

First thing you need to ask yourself is. Are you behind on your credit card bills? If you answered no, then be prepared to get behind. Because the first thing they are going to tell you to do is to stop paying your bills and to not communicate with your creditors.

But of course they are not going to do this for free. What they do usually is they have you make monthly payments to them. I believe we paid somewhere around $200+ a month. The first 3 months of payments go right into the pocket of this company. Then after that they get half of your monthly payment and the other half goes into an account to "save up" money to pay when a credit card will settle with you.

A credit card company will not settle with you unless your usually 3-6 months behind on your bills. When you are so far behind the credit card company will make you an offer to settle your debt. In the meantime while we were "saving up" with this company to settle our debts, I was sued by 2 different credit cards. That is about enough to scare you to death. I immediately quit using this company and worked out the debts myself

Why would you purposely stop paying on debts that were not behind in the first place to wreck your credit and fill your life with harassing phone calls from credit card companies?

Work through your debts yourself. Don't look for a magic pill to solve all your financial problems because it will only lead to grief.

DavidBibby · #4 (**permalink**) 07-16-2010, 04:22 PM

Good Post ltj2010,

I'll add to that as well. Some of these debt settlement companies require you to save the money yourself. This means that you are supposed to NOT pay your creditors and save up a sum large enough to settle with a credit card company when they are ready. Meanwhile.. they will take their "fee" out of your savings each and every month.

Then when the phone calls start.. does the debt management company intervene on your behalf? NO. They want YOU to send the credit card company a "Cease and Desist" letter you could have written yourself. So what ARE you paying them for anyway? What are they REALLY doing for you?

Basically.. you are paying them monthly so that you can do all the work yourself anyway. MOST of these companies add NO VALUE to you. They give you a few standard forms.. and charge you monthly for them.

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