Beware of The Debt Settlement Scam

During the current economic crisis and the credit crunch, one might be considering some options to taking control of their debt.

Everyday there are plenty of ads on TV and radio offering Debt Settlement and Debt Consolidation. Please be aware of what I am about to share with you.

Debt Settlement claims they work a little different than Debt Consolidation because they are the ones that settle your debt up to 50-70% less than what you owe.

Debt Consolidation actually takes your debt and work out a monthly payment for you. They contact the creditors and they pay off your debt with the money you send them monthly. They don't settle your debt for less than what you owe, like Debt Settlement.

Then there is the option of bankruptcy, which is the worst case scenario, but sometimes needed. A bankruptcy will wipe out all your debt, if you qualify. You have to meet with a lawyer to see if you qualify. If you choose this option, your credit report is blemished for up to 10 years. After a bankruptcy, you can get credit again. In fact, the creditors will contact you right away because they know you have filed bankruptcy and they want to be the first to get your business. You have to be careful of that situation as well.

I would advise against using a Debt Settlement company because I honestly feel that they are financial scammers! Don't fall for it unless you are a person that has enough money to cover half the amount of the total debt you owe. They take your money and place it into a "special" account. They then contact your creditors and attempt to settle on the debt for less than you owe. If you are that individual then maybe it could work for you. But if you had that kind of money, why would you need a company like this?

What Debt Settlement companies do is prey on the desperate people who are already experiencing financial difficulty. They charge you a huge fee to take on your accounts, set you up with a "special bank account"; draw a monthly amount from your checking account and place it into this "special account". When, and only when your account accumulates a certain amount, they will call the debtors and try to negotiate a settlement on your accounts.

Here is the reason I call Debt Settlement companies financial scammers. It's because initially they will go over all the details with you and make it sound really good, like they are really going to help you. What they don't tell you is that they will not contact your creditors at all until you have a certain amount accumulated in this "special account". Now depending on your debt, this could take months! They also advise you not to pay on these accounts and not to answer the calls from your creditors. They tell you this because the longer your accounts go unpaid, the easier it is for them to make a good settlement on your accounts.

In the meantime, your creditors can actually sue you, place judgments against you, and place leins on your home and possibly garnish your pay. And, once you have signed a contract with Debt Settlement, you can not get any of that huge fee they charged you upfront, back! You can only get what is placed into your "special account" refunded to you. So they keep your money. Because you have signed a contract with them, they don't have to return that huge fee they initially received from you.

Also, the people that work for those companies are trained to lead you on to believe one thing and once you have signed on as a member, and you receive copies of the paperwork that they get you to sign online, it's different than what they told you by phone. You see, after you pay that huge fee upfront and they begin to draw your monthly fee from your checking account, half of the monthly fee goes directly to the company for another 12 months. Therefore, what you are putting into that "special account" is only half of what you thought was going into it for 12 more months; making it even longer timeframe to accumulate that certain amount. It's ridiculous how they are allowed to get away with this!

Please, if you are considering going with Debt Settlement, do your research. I have talked to a lawyer about this and I have since been advised from a reputable lawyer that Debt Settlement companies don't work for the reasons I have explained here in this article.

Be sure to weigh all your options. While we are on this subject, there is another option. Pay off your debt yourself. You may consider a second income. Not a second job, a second income.

I train people how to obtain that second income daily. Perhaps I can help you too.

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