The Hidden Risks of Debt Settlement
Countless family budgets are strained at the seams. Most consumers know that to reduce or remove debt, they can file for bankruptcy. However, they may not want to have a bankruptcy on record or perhaps they have filed in the past and are in the same situation once again. Families that fall into this category find themselves with very few options. They can continue to make payments, attempt to settle debt on their own, or worst of all, ignore the growing debt.
Many of these same families turn to debt settlement companies in their quest for help. Asking for assistance is not a bad thing, and even quite courageous in some instances. But what happens when a family looks for relief in the wrong place? Some are turning to debt settlement companies that could end up leaving them deeper in debt than when they started. These debt relief companies tend to collect most or all of their fees from families up front and prior to reducing any debt. A family must pay these high fees regardless of whether debts are settled. Even if a debt settlement attorney is consulted, there is no guarantee that any debt will be retired. Debt settlement companies can deduct the entire settlement fee and leave a family stuck with their original debt.
Furthermore, hiring a debt settlement attorney does not guarantee debt collections will be suspended. In some cases, considerable time passes before creditors are contacted. Some families are even advised by their debt settlement attorney to have no contact with their creditors while the process is set into motion. In the meantime, interest, penalties, and debt continue to grow at higher rates than before. In worse case scenarios, families can be sued, have wages garnished or be left with their credit ratings in tatters. Families considering the use of debt collection agencies or debt settlement attorneys should carefully research and consider the risks. Other alternatives, such as nonprofit consumer credit counseling services, are available and carry less risk along with better outcomes. Universities, credit unions, county extension offices, military bases, housing authorities, and financial institutions are all great resources for locating legitimate consumer counseling services. As with any business, research should be conducted. Nonprofit does not necessarily mean it is legitimate or free!
