Debt settlement companies have been around for about 10 years, but have become very popular during hard economic times. New bankruptcy laws have made it considerably harder for the consumer to qualify and many are turning to debt settlement as an alternative.
Debt settlement companies allow the consumer to make payments to a separate savings account until it reaches an amount the company will accept. According to The Association of Loan Companies (TASC) the average consumer debt is settled at about 50 percent less than the original loan balance.
Opponents, including some members of congress claim that settlement companies charge exuberant fees for their services. Although, it is true that there are many unethical firms out there, there are many legitimate companies that treat the consumer fairly as well. Legitimate companies will usually not charge an upfront fee. It is imperative that the consumer learn to recognize scams and to steer clear of companies wanting excessive upfront fees.
Consumers who have smaller amounts of debt or cannot file bankruptcy due to new laws may turn to debt settlement as a viable option. It is very important to make sure a prospective settlement firm is a member of (TASC). TASC is the regulatory body of the debt settlement industry and any company that is not a member should be avoided at all cost. A large number of states require debt negotiators to be lawyers. If a company has not yet implemented the attorney based model they should not be utilized.
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Bankruptcy is the last option for borrowers to get rid of their debts. It is always suggested that borrowers should try out debt relief options in order to get rid of their debts before filing bankruptcy. The option of debt settlement will not only help them in avoiding collection calls but will also help them to get rid of the debts faster. They can settle their unsecured debts like credit card debts, medical bills, payday loans, etc. with the help of debt settlement. They can do it on their own or they can contact professional debt relief companies for it.
ReplyDeleteThank you for sharing. Many people don't know that it is sometimes possible to avoid filing bankruptcy altogether by working out a financial solution and payment plan. The best bankruptcy help is preventing you from ever having to file for bankruptcy.
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