Debt Negotiators: Scam or Solution?

Many of you are searching for debt reduction programs that actually work and can get you out of debt without ruining your credit or leaving you in worse shape than you already are.  There are solutions that could possibly help many of you, but debt negotiators are almost always NOT a good option.

We have talked about how debt negotiation services work in previous articles.  In short, a settlement or negotiation company will have you sign a contract and agree to send a monthly payment to them to cover your debt.

These monthly payments, however, will NOT go to your creditors.  The funds are simply held by the company for several months, with their fees being deducted every month.  Eventually, you will save up enough money for them to attempt to settle one of your debts.  Then and only then will the company contact your creditor and attempt to negotiate your debt.

The major problems with this model are widespread and fairly obvious.  First, your creditors are not getting paid during this process.  We all know that credit card companies are usually not very happy when you start missing payments.

Obviously, fairly major damage can be done to your credit.  Still, many people seem to shrug off worries about their credit score and just want to get out of debt.  While we wish that more people would reconsider this line of thinking, debt negotiators still are not the answer these people are looking for to help reduce debt.

While your credit cards go unpaid, you will normally have interest and fees added on to what you already owe.  Your balances will keep rising, and you will probably be getting collection calls every day.

The most shocking fact to many people is that there is no guarantee that a settlement with your creditors can be reached.  If this happens, you are the one responsible for paying of the now much larger debt, and you’re stuck with ruined credit.  Your creditors can even choose to sue you for your balances if they wish to.

The worst part is that, if any of these very bad things should happen, most people will not receive a refund for the thousands of dollars in fees that they paid to the credit card debt negotiation company!  Many consumer have been left feeling like they paid thousands of dollars only to be left in even more debt.

Rather than putting your finances in the hands of these risky services, you’d be much better off paying the debt on your own or speaking to a non profit credit counselor.  However, if you insist on working with a debt negotiator, at least be sure to research the pros and cons of debt settlement very carefully.

This entry was postedon Monday, July 19th, 2010 at 5:25 pmand is filed under Tags: debt negotiation, debt negotiation services, debt negotiators, debt reduction, debt settlement.You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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