Debt Negotiation Advice

how legal are the "debt settlement companies, and how do they work?

Public Comments

1. You don't need anyone to do it for you. All they do is negotiate your debts for you and collect a fee. You can do it yourself! Call all of them and work out a payment plan and try to get your interest lowered or stopped. Then, make the minimum payments on every one of them. On the lowest dollar value, put all your extra effort toward paying it off. Once it is paid off, then roll that extra money to the next largest balance. Continue this snowball until all your debts are paid off. You proabbly need to cut your expenses back to the bare minimum. Get rid of cable, cell phones, internet, etc. Lower your electric bill, gas bill, water bill, etc. Don't eat at a restaurant until your debts are under control. Try to increase your income by getting a second job. If you have a car with payments, get rid of it, and buy a good dependable used car for CASH. Go to the library and get "The Total Money Makeover". Read it and follwo it carefully. Go check out Dave's website as well. www.daveramsey.com
2. Most debt consolidation companies are a rip off. I would suggest purchasing the Platinum Fico Kit from www.suzeorman.com and fixing your credit yourself. If you invest the time and $45 (for the fico kit), you can get yourself out of debt.
3. I would stay away from any debt settlement places. I tried one. They say they can settle on 40% of amount owed but they take a 15% fee of the total debt enrolled. That equates to paying 55% of the balance off. Then on top of that they make you pay chunks the first three months and that makes you get in even further trouble with the creditors meaning that you are paying the debt settlement place a big fee for three months and they are not doing anything for you. Then after the 3rd big payment goes through they they start to try negotiating for you ONLY if THEY are contacted by the creditor. They don't contact the creditors for you. THe creditors contact them and say "we will settle for such and such an amount on this account" then some will say they want a lump sum and some will say they will take three payments....at the most. I dealt with one and they were not there for me when I was looking at lawsuits and not all creditors will work with these companies, keep that in mind. So they did settle a couple accounts for me BUT by the time I added up what I paid to settle and what I paid into them....I did not save any money and I think I actually lost a few hundred dollars. So after dealing with them, I still ended up having to declare bankruptcy. So my advice, stay away from them. The Suze Orman kit is a good idea. But otherwise check into credit counseling. I would recommend Green Path Debt Solutions, they are good to work with and will be honest with you. I called them before I tried one of the debt settlement places and they recommended I declare bankruptcy. I did not listen and tried to settle and ended up declaring anyways....so Green Path knows what they are talking about. Depending on your income, you may have to pay them ,or you may not. I make just enough that I did have to pay for their bankruptcy counseling but not my initial one the year prior. So another option is also this, go to a reputable bankruptcy attorney. Most also work on settling accounts legally (making sure you have the right paperwork and so on so that the company can not try to collect from you later on) and the lawyers charge a far smaller fee than the debt settlement places do. You don't have to file bankruptcy if you go to a bankruptcy attorney. The first consultation with them is typically free. So go see the lawyer too and they can put it into perspective for you and tell you your options. Just get a good lawyer and a good credit counseling place. www.greenpath.com is great, really. My lawyer had specialized in bankruptcy for over 30 years and also teaches all over our state the proper ways to file and all that. So I knew I had a good one. Good luck
4. Debt settlement companies are very legal. They serve no real purpose but they are legal. Anytime your accounts go into a bad status the actual creditor will negotiate settlement anyway. So whats the point of having a middle man to do the work. The creditor will automatically settle for pennies on the dollar before it charges off. And please don't pay any collection agencies any money. If you want to be done with these accounts along with the headache and hassle contact me creditsurgeon@gmail.com. I will show you a way out without paying them a dime.
5. they are legal -- but a lot of things are legal -- but how good they work is a matter of opinion -- i think they are a complete waste of money -- take the money you would pay them and put toward your debt -- you have received the goods/services quit figuring out how to get from paying and start paying -- it may mean to downsize you life style and get your spending under control!!!