subject: Debt Settlement Companies - Frequent Mistakes Made by Debt Settlement Companies That Might Cost You [print this page] Debt Settlement Companies - Frequent Mistakes Made by Debt Settlement Companies That Might Cost You
There are many debt settlement companies out there that might seem reliable, but are not. Many of them make terrible mistakes that cost the costumer more than he can afford. Some of them even make these mistakes on purpose to take advantage of the client and get more money.
When first going to a debt settlement company they might propose that you will deposit a certain amount of money into an account while they make negotiations with the creditors. This is usually a bad move because most people come to debt settlement companies because they cannot afford to pay anything anymore. Making them pay a large sum costs the client too much and in the long run the client might go for bankruptcy.
Negotiating with the credit issuer too late might be another problem. Some debt settlement companies, especially the popular ones, have a lot of clients and cannot manage them all at once. So if you hire them for their services they might end up dealing with the client too late and you will probably end up being sued because the bank or your credit issuer didn't know what you were doing and why you stopped paying.
Getting the client into more debt. Some companies have such a great fee that is almost impossible for the client to pay it all. Actually their fee can be as big as the reduction they get so the client gets almost ripped off and with their credit score lowered. Another thing would be that they don't get a big enough reduction so that the client can pay their rest of the debt in a lump sum.
Another mistake would be a long payment plan which is not beneficial for the client. When the company negotiates with the creditor they might make a bad payment plan and manage to get the client pay as much as he paid before they got into debt. The longer the payment period is, the higher are the interest rates so clients should avoid such payment plans.
Make sure that the company you choose is very clear about their plan at the beginning so that you can avoid such mistakes and don't wake up one day owning more than you owed before going for debt settlement.
Debt settlement is a legitimate alternative to filing bankruptcy and often makes sense for consumers on the verge of bankruptcy. There are also other debt relief options available so it would be wise to speak with a debt relief specialist to go over your different options.
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