Engaging A Debt Settlement Firm Can Bring Debt Collectors Down On You.

Debt settlement firms expect you to have at least $10,000 in credit card debt. They expect you to pay them $1500-2000 or more of that $10,000 in fees before they settle your debt. They also expect you to stop paying your credit card and give those monthly payments to them for their fees and your eventual lump-sum settlement.

So then what happens if they cannot settle your credit card debt? What happens to what you have paid them? What happens to the credit card account that is not being paid and to your credit rating? If they tell you they can get a 50 percent settlement on $10,000, how long will it take you to save $5000 plus $2000 for their fees?

Saving $500 a month for 14 months will yield $7000. At that rate of savings it will take more than a year to effect the lump-sum settlement with $5000 after $2000 in fees is taken. After six months the banks write off bad credit card debts, and within the year they sell those bad debts in bulk purchases.

If that happens to you, that means some junk debt buyer has bought your debt for 10 cents on the dollar before it has been negotiated. At that point there is no reason for the bank to remove the charged-off debt’s bad mark from your credit report, which means it will be there for seven years.

If you are prepared, you can handle the junk debt buyer?s collection efforts, according to the Credit Card Debt Survival Guide. But if you have placed your trust in the debt settlement firm, you can be blindsided by a junk debt buyer and threatened with a court summons and possibly even be served one.

So, the debt collectors are at the door. That debt is obviously not settled. The settlement fee is used up. Your credit is tarnished. But, you still have $5000, if, and a big if it is, the settlement firm put the money in a third-party escrow account.

Matt Highlander writes about the many strategies for eliminating credit card debt; some for those who can pay, some for those who cannot pay. Read all about them in the 230-page Credit Card Debt Survival Guide

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