December 2, 2013

Empty Debt Settlement Promises

“Cut your debt in half fast!”

“Put a stop to the harassing creditor calls!”

To desperate ears, these catch phrases sound very enticing. Debt settlement agencies make all kinds of promises, but can’t necessarily deliver. They allude to having all the answers to your financial problems and want you to trust them to free you from your burden of debt.

Debt Settlement Lies

1. Save 60-70%!!!

Be wary. If it sounds too good to be true, it probably is! The start-up charge and the monthly fees are usually left out of the initial equation. It will cost you more and more, the longer it takes you to get through the program. Ask for specific numbers, based on the amount of your debt and what you can pay each month. Most likely, they’ll be pretty vague with their answers.

2. We guarantee creditors will settle!

Sounds simple, doesn’t it? What they fail to reveal is that you need to be behind in order for a creditor to be willing to accept less. A program like this will make a mess of your credit history. Plus, if you haven’t already been receiving those annoying phone calls from creditors, you will now!

3. Stop those annoying collection calls!

Collection calls are relentless and extremely stressful! Debt settlement agents usually won’t tell you that only a lawyer can stop third-party collection calls. By law, the third-party must deal with the attorney, if the client has attorney representation. Most debt settlement companies are non-lawyer based. Debt collectors and creditors aren’t obligated to deal with non-attorney based debt settlement companies. Therefore, collectors will continue to try to collect your debt, and may even sue you.

4. We will negotiate with your creditors!

Legally, they can negotiate with creditors if you sign power of attorney forms. Typically, they’ll advise you not to have any further contact with your creditors and that means not making monthly payments. The Federal Trade Commission has charged that some debt settlement companies have completely neglected to contact creditors or debt collectors at all! Meanwhile, late fees and other charges keep accumulating on client accounts. The National Consumer Law Center conducted an investigation of debt settlement companies and published a report in 2005. They concluded that debt settlement doesn’t benefit consumers when its business model requires clients to stop paying creditors, hold money in reserve accounts, and pay their large fees.

Be smart. Unscrupulous companies mislead potential clients with promises they have little or no intention of fulfilling. Don’t fall victim to this mainstream financial scam that may leave you with more debt and stress than when you started.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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