Debt settlement firms call for a minimum of $10,000 in credit card debt. Of that $10,000 you have to give them $1500-2000 in upfront fees for them to settle your debt. To save money for a lump sum settlement and their fees, they tell you to stop making credit card payments and to give that money to them for their fees and for an eventual lump sum settlement.
If the debt settlement firm says they can get a $5000 settlement for that $10,000 of debt, how long will it take you to saves $7000, which includes $2000 in fees? What happens if they cannot settle with your credit card company? What happens to the account that has not been paid? What happens to the money paid to the debt settlement firm, and what about your credit rating?
Saving $500 a month for 14 months will yield $7000. At that rate of savings it will take more than a year to effect the lump-sum settlement with $5000 after $2000 in fees is taken. After six months the banks write off bad credit card debts, and within the year they sell those bad debts in bulk purchases.
That means your debt is owned by a junk debt buyer before the debt settlement firm has settled it. It also means the bank has no motivation to remove that debt's bad mark on your credit report and that the negative listing will be there for seven years.
If you are prepared, you can handle the junk debt buyer?s collection efforts, according to the Credit Card Debt Survival Guide. But if you have placed your trust in the debt settlement firm, you can be blindsided by a junk debt buyer and threatened with a court summons and possibly even be served one.
So, the debt collectors are at the door. That debt is obviously not settled. The settlement fee is used up. Your credit is tarnished. But, you still have $5000, if, and a big if it is, the settlement firm put the money in a third-party escrow account. - 31377
If the debt settlement firm says they can get a $5000 settlement for that $10,000 of debt, how long will it take you to saves $7000, which includes $2000 in fees? What happens if they cannot settle with your credit card company? What happens to the account that has not been paid? What happens to the money paid to the debt settlement firm, and what about your credit rating?
Saving $500 a month for 14 months will yield $7000. At that rate of savings it will take more than a year to effect the lump-sum settlement with $5000 after $2000 in fees is taken. After six months the banks write off bad credit card debts, and within the year they sell those bad debts in bulk purchases.
That means your debt is owned by a junk debt buyer before the debt settlement firm has settled it. It also means the bank has no motivation to remove that debt's bad mark on your credit report and that the negative listing will be there for seven years.
If you are prepared, you can handle the junk debt buyer?s collection efforts, according to the Credit Card Debt Survival Guide. But if you have placed your trust in the debt settlement firm, you can be blindsided by a junk debt buyer and threatened with a court summons and possibly even be served one.
So, the debt collectors are at the door. That debt is obviously not settled. The settlement fee is used up. Your credit is tarnished. But, you still have $5000, if, and a big if it is, the settlement firm put the money in a third-party escrow account. - 31377
About the Author:
If you are seeking credit card debt relief, whether you can afford to pay or not, read Matt Highlander'scontributions in Credit Card Debt Survival Guide.
