Debt Relief Service

Should You Use a Debt Relief Service?

There could be times when a debt relief service comes into your thoughts. If you have found yourself with a huge amount of debt with no idea how you are going to pay it off, you may be thinking a service that promises you they can erase your debt for pennies on the dollar is the answer to your prayers.

Beware! They may not be telling you the truth. Debt negotiation can be risky and can carry serious, long-term consequences to your credit report, making it hard for you to get credit in the future..

If you are considering any debt relief service, read the fine print. Make certain you completely understand the terms and what they are promising you. If companies are offering you the following, avoid them at all cost!

  • The debt relief companies makes a promise to you that your unsecured debts can be paid off for pennies on the dollar. There is no guarantee that any creditor is going to accept a partial payment for your debt.

    You need to contact them directly and discuss your situation and see if you can make financial arrangements with them which may or may not include a settlement negotiation.

  • If the service requires a substantial monthly service fee along with a percentage of what they save you, start looking elsewhere. Unfortunately, most of the debt relief services do charge a pretty large fee for their services, including but not limited to a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee which might be a percentage of the money they claim to have saved you.

  • Never ever listen to them if they tell you to stop making payments with any of your creditors. Stop making these payments and you may find yourself paying late fees and interest charges that continue adding to the amount you owe them. Not to mention your credit score will be flushed down the toilet.

  • A debt relief service may tell you that creditors never sue people for not paying their debts. Now you should know that is not true. They have every right to sue you to get back the money you owe and don't think they won't. Should they win a law suit, you man find your wages garnished or even a lien placed on your home.

  • No one can remove accurate negative information from your credit report and don't let them tell you otherwise. It's illegal.

My daughter did use a service once and they charged her a $350 fee up front. They ended up getting a few of her creditors to accept a lower payoff. That was a good thing. Unfortunately her 3rd payoff was too high for her and the company then dropped her.

I am not sure if she had additional fees with them but I do remember that the money the creditors reduced her debt by, she later received a notice from the IRS that that was considered income and she needed to pay taxes.

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