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Debt Settlement Companies – The Good, The Bad And The Ugly

If you're having a problem with debt the odds are that it's credit card debts. And you're not alone. One recent study revealed that the average American household owes more than $16,000 on credit cards. It's not unusual to find people owing $20,000, $30,000 or even more on their credit cards (Comtinued ...)

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Helpful Financial Information from National Debt Relief …

The good

The good of using a debt settlement company is that it should be able to settle your debts for much less than you owe. In fact, most reputable debt settlement companies are able to settle debts for around 50% of their balances. This is because they have experienced debt counselors who have excellent working relationships with almost all lenders and debt collection agencies.

A second “good” of hiring a debt settlement company is that your debts will be consolidated in that you will no longer be required to pay your creditors. Instead, you will send the settlement company a payment every month until you’re debt free, which typically takes anywhere from 24 to 48 months depending on the size of your debt.

Finally, the payment you will be required to send the settlement company will most likely be much less than the sum of your current payments, which will free up extra money for utilities, housing, food and clothing.

The bad

There are unfortunately some bad things about hiring a debt settlement company. For one thing it will cost you money. Reputable debt settlement companies generally charge a flat fee ranging from 15% to 25% of the total of your debts. That could be as much as $5000 if the settlement company were to settle $20,000 of your credit card debts. Of course, if it settles those debts for 50% or $10,000 you would still come out $5000 to the good.

Hiring a company to settle your credit card debts would have a negative effect on your credit score. This is because lenders report settled debts to the three credit-reporting bureaus as "settled," "settlement" or "settled for less than full amount" instead of “paid in full.” The good news of this "bad" is that the effect debt settlement would have your credit score would not be as severe as if you were to file for bankruptcy, which could drop it by more than 200 points.

Even a top debt settlement company such as National Debt Relief can't settle all debts. The only debts that can be settled are unsecured debts such as credit card debts, personal loans, department store credit card debts and some credit union loans. Secured loans, which would include auto loans and your mortgage, cannot be settled. Nor can some unsecured debts including spousal support, child support, student loan debts, alimony and past due taxes.

A fourth "bad" of hiring a debt settlement company is that not all lenders will work with them. Some will insist on getting full payment regardless. This means you could end up paying the debt settlement company and some of your creditors, which could put you back into a hole.

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The ugly

The ugly part of credit card debt settlement is that there are some definite scam artists lurking out there just waiting to pounce. These are companies that engage in deception and never deliver on the promises they make. For example, they might "guarantee" that they can settle all of your credit card debts for, say, 30%, 40% or 60% of the amount you owe. Other of these scamsters will try to collect big fees upfront before they have settled any of your debts. While this is prohibited under the Federal Trade Commission's Telemarketing Sales Rule it still happens. You should definitely not do business with any debt settlement company that:

• Wants to charge you any fees before it settles your debts

• Talks about some "new program from the government" designed to bail out personal credit card debts

• Guarantees it can make your unsecured debts disappear

• Advises you to stop talking with your creditors but doesn't explain there can be serious consequences to this

• Says it can stop all calls from collection agencies and all lawsuits

• Guarantees that it can pay off your unsecured debts for pennies on the dollar

How to choose a reputable debt settlement company

One good yardstick is if the settlement company offers a 100% satisfaction guarantee. For example, with National Debt Relief you can cancel out of your program at any time you become dissatisfied – and for any reason – and won't be charged a single cent. Second, reputable debt settlement companies have been in business for at least five years and have many positive reviews available online. They are Better Business Bureau certified and most likely belong to the American Fair Credit Council. This is important because this Council is the watchdog of the debt settlement industry and its members are pledged to treat their customers honestly, fairly and transparently.

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Does this sound familiar?

• You are tired of worrying about money…• You are losing sleep due to mounting credit card debt…• You are fighting with your partner about the bills…• You are living paycheck to paycheck…• You are falling behind on your debts…• You are losing hope…

It’s time to talk with National Debt Relief!

Call 1-888-703-4948Or go to http://www.nationaldebtrelief.com