What Debt Settlement Companies Don’t Want You To Know

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I’m finally going to spill the beans.   In this article, you’ll find out what most debt settlement companies don’t want you to know.   I’m a big advocate in providing consumers the relief they need without going to expensive third party companies.   This article will teach you how to choose the best debt settlement company to manage your account.   I’ll cut straight to the chase:

  • Special Relationships with Creditors: If you contact a debt settlement company, you might find that some of them say that they have special concessions with credit card companies to get you the best possible deal.   This is incorrect.   Some creditors like Chase and Discover actually WON’T work with 3rd party companies!
  • Attorney Networks: There are a lot of attorney backed debt settlement companies who try to fool you into thinking that you’re actually working with an attorney.   You might meet with an attorney face to face, but they actually hire back-end debt settlement companies to do the work for you.   You rarely get to talk to the attorney directly, and all questions are directed to a para-legal.   Don’t be fooled into thinking that an attorney will be doing all of the negotiations.
  • Representation in Court- Many debt settlement companies will tell you that they will send an attorney to represent you in court if you get sued.   If you’re lucky enough to have someone actually represent you, don’t let this be the selling point on why you joined with their program.   Just because you have an attorney next to you, doesn’t mean all your debt problems will go away.   An attorney can NOT magically make your debt disappear.   They might help you file an answer to a summons, but most likely, they will steer you into bankruptcy if you cannot fulfill the debt.
  • You MAY be liable for taxes- I’d like to think that it’s pretty common for most debt settlement companies to disclose that your credit score will be impacted by enrolling in this type of program.   However, one topic that they often avoid is the possibility of tax liabilities.   Creditors are required by law to report any debt forgiven over $600.   If you feel that you are solvent, and maybe liable for taxes, you may want to think twice before joining a debt settlement program.   After all is said and done, your percentage of savings might not be that great after paying your taxes.
  • Credit Counseling — This one is my favorite.   Debt settlement companies might try to steer you away from credit counseling programs since their payments are much higher.   This can be true.   However, credit counseling is still effective for those can afford the payments and are not more than 60 days delinquent.
  • Cease and Desist Letters- No one can stop the original creditor from calling you.   After all, you borrowed money from them and they have every right to contact you.   They will state that they will send a cease and desist letter to your creditors, but I would definitely tread with caution on this one.   When sending these letters, you might increase the likelihood for getting sued.   If the creditors can’t get in contact with you, their next step is to escalate this to their legal department.

Anyone who is thinking about enrolling in a debt settlement program should really take a step back and see if it’s right for you.   There’s no secret formula that they have.   Another thing to remember is to learn how to spend money wisely, and this involves setting up a monthly budget and a spending journal.   This can go a long way! You can go to www.springcoin.com to get a free analysis to see which debt relief program is best for you and avoid the use of expensive third party companies.   And as always, feel free to ask me any questions you might have.

 

3 Responses

  1. Sean Ryan

    November 11, 2011 2:20 pm

    The latest rule from The FTC regarding Debt Settlement states that companies may NOT claim a “special relationship” with creditors. Further, though, Chase has recently taken a stance not to work with 3rd parties, once charged off, the collections company generally will. Chase may, however, keep an account in house if the debt is very large.
    Most attorney groups in debt settlement have been set up by settlement companies so they can continue to charge LARGE up-front fees, a system which has serious faults and is also banned by The FTC. I suggest avoiding them as their are NO guarantees & often a debtor’s financial situation changes overtime- i.e. gets better (no longer need DS, or worse, need bankruptcy) and now you’ve paid a ton money for a service you no longer need!

    Reply
  2. John (Vikas Sharma)

    April 26, 2012 7:05 am

    Debt Settlement Companies are very smart they know that they can lure you by offering you quick debt settlement service while as a matter fact there is hardly anything like quick debt settlement. Debt Settlement usually takes long time.
    One should be very careful while selecting a Debt Settlement company.

    Reply

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