Debt Consolidation and Settlements is not for the Weak at Heart.


When you consider debt settlement consolidation,it means you are in deep and getting desperate. These predator companies realize this and are more than willing to tell you all of the benefits and will not tell you the disadvantages until you sign a contract with them. These types of companies call themselves many names including: Debt Counselors, Debt Consolidation, Christian Financial Services, And Not for Profit groups. Be not fooled by the terms "Christian" or "Non Profit" as these are just ploys to get you to trust them.


Facts about the Debt Settlement process in a nutshell

* You pay up front for services before they will take your case either flat rate or a percentage of your total debt. P.S, Cash only no Credit cards.

* You then need to be in default on your payments, if you are not, then your "Counselor" will tell you to stop paying. Keep in mind once you stop paying late fees will accumulate,and interest rates will soar, plus your official debt will quickly double or triple. With this in mind here is something your "Counselor" will not tell you. You will have to pay taxes on any debt relief. To get the full depth of this, let me do scenario math. Your Original debt $30,000 + $ 20,000 (low ball figure of late fees and interest charges). The credit card company settles at $10,000. The only problem is you have is you owe gift taxes to the IRS on $40,000 which is roughly 30% that would be approx. $12,000 in taxes.

* Debtors will call, they will call at work,they will call your mother, they will call your neighbor, yep it is illegal, but I assure you, they call and verbally harass you. While you are not paying your bills, your debt gets sold many times, each debtor a little less scrupulous than the last.

* Your credit will be trashed.

For anyone considering Debt Settlement, I would highly recommend seeing a bankruptcy attorney instead. Most attorneys offer a free consultation,you will not have to pay relief taxes as with a consolidation,and attorney fees are cheaper.

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6 Responses to this post

  1. Jennifer on August 13, 2009 at 12:48 PM

    Hi,
    I used ”Credit Solution” to settle my debt and avoid bankruptcy. They managed to reduce my debt up to 58% and improve my credit score. It's legitimate . I came across this company on NBC News Special Edition. Check it out here:
    http://CreditSolution.com

  2. ~The Real Deal~ on August 14, 2009 at 3:19 AM

    I like the page design, but more importantly this is a great eye opener or warning for people who aren't aware of these subjects.

  3. Rachel Davis on August 16, 2009 at 11:07 PM

    Same kind of solutions cant be applied for all debtors' problems. They have to work out with debt professionals and find out which plan suits them. :)

  4. Investors times on August 26, 2009 at 4:12 AM

    Debt consoldation is quite good especially if you have some high interest debt. It will reduce the interest rate and make it easier for you to pay the debt.

  5. BeyondBankrupt on August 27, 2009 at 7:43 PM

    Never take for granted your debts and try to prioritize them first. Create a debt management plan with your creditors so that you can fairly settle your obligation.

    ___________________
    Avoiding, Understanding and Surviving Bankruptcy

  6. Rachel Davis on August 28, 2009 at 11:41 PM

    One can go for free credit counseling with professionals, before situation going out of hand. :)