Debt settlement firms want you to have at least $10,000 in credit card debt. They want $1500-2000 of that $10,000 in fees paid first before they begin working on settling your debt. They tell you to stop paying your credit card and to send those payments to them for their fees and to save for a 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?
To bank $7000 you will need to save $500 per month for 14 months. At that rate, it will be over a year before you can settle that $10,000 of debt for 50 percent. The credit card companies typically charge off unpaid debts after six months. They often sell those charged-off debts within the year.
That means your debt is owned by a junk debt buyer before the debt settlement firm has settled it. It also means the bank has no motivation to remove that debt's bad mark on your credit report and that the negative listing 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.
Author Resource:
Matt Highlander writes for Credit Card Debt Survival Guide . If you are searching for credit card debt relief, read about proven strategies for settling debts and handling debt collectors as well as collection attorneys.
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