Are These Debt Negotiation Companies Worth It?

This might be too long for a blog. However, I thought it was important to expose the reality of these so-called debt solution companies. Most of these companies will market that they can take your current debt and negotiate on your behalf to reduce that amount by up to 80%. I received a proposal that a listener received from a debt settlement company for $ 48,000.00 worth of debt.

This company proposed that they were going to reduce his debt by roughly 60% and he was going to owe only $ 19,014.27. However, he was going to pay this company $ 7,313.18 for that service.

Here is the reality of these services:

Contrary to what they say, most creditors will aggressively negotiate with anyone past a certain point. This is not rocket science and something that you can do for yourself.

In their proposal, they start with a certain amount of debt. They give you a dollar amount that you are going to pay each month for 48 months to complete their “forecasted” program. However, they cannot guarantee that the penalties and interest on those debts will go away. It is very likely that over the next 48 months, that original $ 48,000 debt will have greatly increased due to penalties and interest.

They get paid the entire fee up-front. The first 13 payments will go to fund their fee. After that, you are at their mercy. They have been paid.

Creditors can still choose to sue you. They will not represent you in a lawsuit. If you are sued, you are on your own. This is the big risk. You have 48 months (in Texas) that you are potentially subject to a lawsuit. Whether you are with a company or not, you are at risk of a lawsuit.

If any of your accounts are current prior to accepting the program, they will go into default and ruin your credit. For this system to work, they have to be extremely behind.

These companies state they will stop debt collector calls. You can stop debt collector calls with a simple letter.

The bottom line is that you are going to pay big bucks upfront to a company that will make sure that your credit goes into the tank, offer no protection from being sued, and negotiate on your behalf something that you can do yourself.

It is yet another smoke and mirrors marketing scheme from the credit industry. Unfortunately, only time will tell if a program like this will work. You sign off that there are no guarantees. As in the case presented above, this listener will be out $ 7,000 within the first 13 months, whether it works or not.

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