Sea of Debt - Debt Settlement Company

Debt Settlement Company

What can a debt settlement company do for you that you can't do for yourself? We'll explore that here.

Getting Professional Help

If you're in debt and tried everything to get out but it's just not working, debt settlement might be your last resort before bankruptcy. But you have options. First, you can try to settle the debt yourself. Contact your creditors and start low. It used to be that credit card companies would agree to settle debt for 60-80% of what you actually owe, but recently, some have gone as low as 50%. The problem is, most creditors prefer to do this through a debt settlement company. Why? Well, you have to look at it from the creditor's point of view. If you haven't made any payments for 90 days, taking your word that you're going to pay even 50% of what you owe is a risk for them unless you can pay by "electronic check" or debit card by phone. And if you're not a skilled negotiator, you might not get great reductions.

However, if you go with a debt settlement company, you are dealing with skilled negotiators who have had years of practice in getting deep reductions from creditors. And a debt settlement company might give you the option of paying back over a period of two or three years.

When you're looking for a debt settlement company, don't just take the first one that comes up. It's a good idea to check them out with the Better Business Bureau and other consumer groups first. A big red flag is any debt settlement company that asks you to pay upfront. Many of these companies want you to pay upfront then never provide the services. And they often want you to pay with a cashier's check! No paper trail that way. Instead, try to find a debt settlement company that only requires you to pay after they provide the agreed upon service.

There's no question that a debt settlement plan can score you big reductions and save you a lot of money, but bear in mind that it will have a negative effect on your credit report for seven to 10 years. You might want to explore other debt management avenues first.