Unless you walk around in a suit of amour with the face plate down , chances are you’ve seen the television, radio and internet advertising for the not-for-profit debt relief firms. Automatically when people see the words “not-for-profit” they think “non-profit.” “Non-profit” means an organization that is structured not to make a profit, like a PBS television station. The not-for-profit designation is for car collector’s clubs or other kinds of associations. It’s not a company of people who are adverse to making money.
Some not-for-profit debt relief firms offer to consolidate all your unsecured debt into one mega-loan. In return you make a single monthly payment until it’s discharged and the nasty phone calls stop immediately. They profit from the interest you pay.. Other organizations just offer to council you on paying off your debt for a fee. In this case you are paying for advice. Then there are the debt settlement firms, the solution to avoiding bankruptcy, consolidating your debt, stopping the collection calls and putting your mind at ease.
The way debt settlement firms are supposed to operate is negotiate with all your creditors to lower your balances. Then you pay the settlement firm via automatic withdraw from your bank account an affordable monthly sum. In turn they distribute it to your creditors having agreed to the new terms. For some cosmic reason, most debt settlement firms ask in the neighborhood of $500 per month and claim it will take two to three years until you are debt free.
Sounds like a plan if you are trying to avoid filing bankruptcy and not completely destroy your credit. And when you call a debt settlement firm they will tell you exactly that. Yes, it will leave an unappetizing stain on your credit report, but they claim it’s a better alternative than bankruptcy and will disappear faster as you are actually paying off your debt, not dismissing it and leaving creditors with nothing.
The consumer has to be extra vigilant when entering into an agreement with a debt settlement firm. You must make sure they contact all of your creditors within a certain period of time stating they are your representative and authorized to negotiate a settlement on your behalf. If they do not act quickly, the accounts go to collections and the settlement firm is useless. Then you have the unpleasant task of trying to get your unused monthly payments returned.
When this happens, it’s usually because the debt settlement firm is trying to build up enough money in your account to pay off some loans with one fell swoop. Or, they are just too busy with requests in this poor economy to keep up with contacting all your creditors on time. But for whatever the reason, most consumers get hit with this horrid information when someone telephones trying to collect a debt with which their settlement firm was supposed to be negotiating.
So if your financial ship is sinking and you are looking for a lifeboat, where do you turn? Debt settlement is still a viable option. The rub is, where do you find a company you can trust? Believe it or not calling your bank, credit union or even a creditor for a referral usually leads to some trustworthy recommendations. Remember, people who you owe money would rather renegotiate terms than have you file bankruptcy Chapter 7. In this case the loan is discharged by the courts leaving creditors with nothing at all.
Also, there is nothing to say that you can not call your creditors and negotiate with them directly just as effectively as a debt settlement service. It will mean mailing out extra checks each month, but you keep complete control of your finances and regularity of payments. Now that should leave you feeling a little more settled.
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- Debt Consolidation Is Better Than Debt Settlement. Isn’t It?
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