Did you max out your credit cards? It is easy enough to do, especially when you mix emergencies with luxury spending. You are starting to get billing statements in the mail on a regular basis and constant phone calls. You need credit debt relief!
You might hear that you can reduce your debt or even eliminate it entirely by some online company or over-the-phone representative. Before you dive into credit debt relief with any old business, you need to get the facts. Unfortunately, there are a number of scammers that prey on people who are seeking credit debt relief. You may feel desperate for any option you can afford, but you may be getting yourself into more debt!
Debt settlement companies will not simply erase your debt for nothing, or for a few pennies. You will have to undergo serious negotiating with your creditors, lenders, or debt collectors. The good thing about debt settlement is the fact that you may have the option to resolve your debt for a lump sum, which is generally less that the full amount that you owe. This may be a one-time payment or a monthly arrangement; it really just depends on how much the company is willing to work with you.
Although credit debt relief is ultimately a good thing that will save you money and fix your credit score, there are risks associated with debt settlement. Before you sign up, you should be aware of how they may affect you.
You may be required to deposit money into a separate checking or savings account for an extended period of time. The monthly payments will be drawn from this account. However, it can be difficult to keep up with these payments for 36 months, or whatever the time requirement is. Generally speaking, if you had this much money to begin with, you would not be so far in debt. Make sure you are able to fulfill all the restrictions of the credit debt relief program before signing anything.
You should also know that by no means does your creditor have to agree to a settlement. Each company is different; some may have a plethora of credit debt relief, while others have none. Furthermore, if you have a large debt, you may be pushed aside. Companies try to settle smaller debts first, which leaves yours to accumulate more interest and fees.
The last thing you need to realize is that debt settlement programs and credit debt relief programs may encourage you to stop sending payments to your creditors. Although the settlement company is helping you pay to get rid of your debt, your credit report is being negatively affected every time you miss a payment to your creditors. You will start to get phone calls from creditors demanding payment; they can even sue you. If they win against you in court, your wages will be garnished, or your home will have a lien on it, and so on.
The best thing for you to do before agreeing to work with any debt settlement company is talk to your lawyer or an attorney that specializes in bankruptcy and other legal issues. They can discuss your credit debt relief options with you. If you choose to hire an attorney as your representative, he or she will take care of all of the negotiations. You will be able to rest assured you are not getting scammed or making your credit worse by trying to pay off your credit cards.
In fact, after you hire an attorney to settle your debt for you, you will not be obligated to talk to any bill collectors, lenders, or creditors at all. These phone calls will all be redirected to your attorney. When dealing with a trusted and experienced attorney, you can have peace of mind that your credit debt relief program will work in your favor. Although it may take several months, or years, to settle, along with a substantial amount of money, you will be able to live a debt-free life. If you are ever approached to eliminate your debt for pennies on the dollar, it is probably too good to be true.
Consult with your attorney first. You may be eligible for other credit debt relief programs that are more suitable for your situation. For example, debt consolidation is another program. Bankruptcy, although a last resort, may be the right path for you. Your lawyer will explain all of your possibilities before choosing the right one, because every debt situation is unique.