Advertisements

Debt settlement firms expect you to have at least $10,000 in credit card debt. They expect you to pay them $1500-2000 or more of that $10,000 in fees before they settle your debt. They also expect you to stop paying your credit card and give those monthly payments to them for their fees and your eventual lump-sum settlement.

If the debt settlement firm says they can get a $5000 settlement for that $10,000 of debt, how long will it take you to saves $7000, which includes $2000 in fees? What happens if they cannot settle with your credit card company? What happens to the account that has not been paid? What happens to the money paid to the debt settlement firm, and what about your credit rating?

Saving $500 a month for 14 months will yield $7000. At that rate of savings it will take more than a year to effect the lump-sum settlement with $5000 after $2000 in fees is taken. After six months the banks write off bad credit card debts, and within the year they sell those bad debts in bulk purchases.

That means your debt is owned by a junk debt buyer before the debt settlement firm has settled it. It also means the bank has no motivation to remove that debt’s bad mark on your credit report and that the negative listing will be there for seven years.

According to the Credit Card Debt Survival Guide, you will need to be ready for the junk debt buyer’s attempts to collect the debt. If you are not ready, if you are counting on the debt settlement firm and unaware of the debt’s charge-off and sale, you could be ambushed by a debt collector or collection attorney.

So, the debt collectors are at the door. That debt is obviously not settled. The settlement fee is used up. Your credit is tarnished. But, you still have $5000, if, and a big if it is, the settlement firm put the money in a third-party escrow account.

Matt Highlander spent months researching strategies for credit card debt relief. Read the complete 230-page Credit Card Debt Survival Guide

Related posts:

1. Commonly Asked Questions about Credit Card Debt Settlement
2. How to Get Credit Card Debt Collectors to Focus Their Energy Elsewhere
3. Getting The Most Out Of Debt Settlement
4. When a Credit Card Debt Collector Calls, You Do Not Have to Answer
5. Credit Card Debt Settlement Opposed To Bankruptcy In The United States – Which Is Best For You?