The current economic status in the US sees a nation full of debtors who are a worried lot, people who are on the verge of bankruptcy and even as the nation makes a slow progress to normalcy things are far from being hunky dory. This can be mostly seen in the spate of people who are queuing up to get their debt settled by debt settlement companies/law firms who they think will be in a better position to help them out. While this may be true in many cases given the experience and the negotiating power of the company/law firm in this field, there is an ugly side to the story too.
How did debt settlement companies gain a bad reputation?
Like in most other money related business, there are plenty of chances for fraud and scams which have given a bad reputation to the industry. There are many firms which have cheated people who trusted them with their precious money and not settled their debt.
This happens because often it is difficult for the debtor to know, whether the debt settlement company is actually paying the creditor after collecting your money. For this, it might e helpful for the client to check the review ratings of the law firm/company with the Better Business Bureau or ask around for references from those who have actually used their services for the same.
But having said that as in other industries not everything about debt settlement companies/law firms is bad. There are plenty of firms who have actually helped customers settle their debts to a large extent too.
For this it is always necessary that as a client you need to keep yourself updated about how the process works and make sure that you approach the right kind of people to help you out.
Find out how debt settlement works
“If you have been seriously bad with repayment of your debts and are considering bankruptcy, why not try giving debt settlement a shot?
Bankruptcy leaves a record of sorts on your financial history that mostly sets you back in terms of credit by at least 7-8 years, depending on which form of bankruptcy you opt for. This makes it clear that debt settlement is not really a luxury but often as drastic a measure that need to be taken as bankruptcy.
Industry experts will have you believe that opting for debt settlement can save up to 40-60% of your debts which amounts to about an approximate 15% of your total debts. You must understand though that this is an average database that takes into consideration a larger group rather than a micro one. The figures could vary depending from person to person and the size of the debt too.
The process of debt settlement
What actually happens when you opt to work with a debt settlement company? You will be asked to stop paying your creditors pronto, while this is not on any official record it is an understood statement. The money accumulated thus will go into a trust created to pay your debt.
Of course there is a catch here. When you stop paying, your creditors get mad and here you will need all the protection from the debt settlement company. In fact here you will probably understand why it is always better to hire a law firm( to settle your debts) who can protect you in case a law suit is filed against you.
Apart from angry creditors, you now also have a more or less substantial amount in your trust to let your debt settlement company call on your creditors to negotiate on the debt amount and freeze a lum-sum settlement.
Like anything else yes there is risk in here too. Your credit card score goes for a toss and you have a bad credit report. But one of the reasons why debt settlement is appealing is by the time you have begun seriously considering debt settlement, your credit score doesn’t already look too rosy.
Call your debt settlement attorney, the Shah Peerally law firm if you want more information on how best you can settle you debt.