Debt Settlement Firms - The Disadvantages

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					Debt Settlement Firms - The Disadvantages
Many debt negotiation or debt settlement firms try to portray themselves
as being a reasonable alternative to a reputable nonprofit consumer
credit counseling agency. While both types of organizations have the
potential to help people in need, there are several disadvantages to
using debt settlement firms. These agencies' main goal is to make money
at the consumer's expense.
Debt settlement firms offer negotiation and settlement of unsecured debt
with your creditors rather than providing consumers with budgetary
guidance or a debt management plan. Ideally, one of those two options
would be preferable if you are not able to settle your debts by dealing
directly with your creditors on your own. That is why you should consult
a consumer credit counseling agency - because a workable budget or debt
management plan will solve all of your debt and credit problems more
easily and quickly.
A debt management plan is customized to match your specific repayment
capabilities after you have had the time to meet with a certified credit
counselor, and allows you to lump all of your debts together into one
reasonable monthly payment. Once the program is completed, all of your
creditors will add notes that they have been paid in full on your
official credit record. These positive "marks" on your credit record are
what helps your financial future. A debt settlement firm does not provide
consumers with those "good marks" because the creditors have the final
say as to which debts get fully officially reprieved, and they have no
incentive to do so in a settlement situation.
It is preferable to work with an accredited nonprofit organization that
has at least one certified credit counselor, offers multiple services,
and provides extras for their clients. There are numerous such
organizations out there, and most have local offices and websites where
people can acquire useful information from as needed for research.
However, after factoring in other criteria, the choice to where you need
to turn becomes even more obvious.
Look for complaints filed against any company you're considering at all
levels (local and federal). Ask for and verify all references, and
research them thoroughly using the Internet and any other means you
prefer before considering entering into any type of financial
arrangement. One of the main complaints about debt settlement firms is
that they charge their clients high fees up front before providing them
with any services whatsoever. This should be a major red flag. Ask a lot
of questions before entering into any agreement, and leave their office
immediately if you are not thoroughly satisfied with every answer.
Take the time to thoroughly evaluate all of your options before entering
into any financial agreement, and choose your service provider wisely to
achieve the best results. It would be a shame to wreck your credit report
unnecessarily by working with a company that promises great things, then
leaves your credit worthiness in worse shape than before.
Pamella Neely writes about debt settlement firms and debt consolidation
for http://www.debtconsolidationabcs.com, where you can find other
articles about the pros and cons of consolidating your debt.