If you have experienced calls from debt collectors, you know how frustrating and embarrassing these calls can be. They come morning, afternoon and evening seven days a week. Not even Sunday is a day of rest for debt collectors.
Many debt collectors routinely will reveal information about your debt to employers, neighbors, relatives and family members. Their purpose is to embarrass you to the point that you will do anything to pay that debt off.
Eager to take action and begin putting your finances in order, you call one of those companies that you saw on television or the internet that promised to help you reduce your debt by 40, 50 or even 60 percent. After all, they are there to help you, right?
Think again. Most debt settlement companies are a bad idea. The costs of debt settlement can be staggering when you utilize a third party. They charge you substantial upfront fees, monthly fees and often a percentage of the “savings.” They routinely fail to tell you about the potential additional taxes you could owe, or that they are required to report all substantial debt forgiveness to the Internal Revenue Service.
Our research shows that many of the debt settlement companies have success rates of less than 2 percent. That is a staggering figure. Would you trust your financial future on a company with a 2 percent success rate?
If all of your debts are in collections, then consider ways that you can negotiate your own settlements. Whether you choose to settle on your own or use a debt settlement company, make sure that you understand the pros and cons of debt settlement.
