You can’t go anywhere without seeing an advertisement for debt relief. Debt settlement has become a rage, and it has even managed to turn many people into debtors. It is not that debt settlement is a way out of debt. In fact, it’s a scam that will ultimately get you in deeper trouble.
First of all, the terms of debt settlement usually state that you’ll only have to pay a fraction of what you owe to your creditors. This means that you won’t be able to pay more than 50% of what you owe to your creditors.
Worse, debt settlement companies are operating with the help of a fraudulent settlement company. They use debt settlement companies as middlemen in order to make profits for themselves.
Yes, debt settlement was made to help those who are suffering from mounting credit card debt. However, it turned out to be a complete waste of time. If you take the wrong steps, you can end up in a deep hole.
Here’s some smart advice for those who want to escape debt but are afraid to face their creditors. In the first place, do not sign a debt settlement agreement just because you want to get out of debt. Before you sign any agreement, read every single page thoroughly.
Also, look at getting a debt consolidation service. Such companies will allow you to pay off your existing debts over a period of time. As a result, you’ll be able to pay back more than half of what you owe to your creditors.
Of course, it is possible that your creditors might not take the next step when confronted with professional debt relief services. However, it doesn’t mean that they will completely ignore you. After all, the interest rates on unsecured debt could be very high, especially when you are still in a credit card debt.
These are the risks that you need to consider when you opt for debt settlement and non-profit debt consolidation services. A smart move will always involve making the right choice.
Make sure that you don’t let yourself be pressured by threatening letters from your creditors. There is no reason to lie about why you need to stop paying your bills and make extra payments. The main point is that you’ll just be wasting your time.
Lastly, before you apply for a debt settlement or debt consolidation, you need to think twice about how it will affect your credit score. Remember that if you default on your payments, your credit score could go down. After all, a lot of the credit reporting agencies will flag your account.
While this is a good option, remember that the credit bureaus could also report about your debt settlement company. This means that if you don’t settle your debt, you will definitely have to pay for the fees of a debt consolidation service. While this is a risk, the fact is that you will save money in the long run.