Today their are many debt relief programs around and a lot of them are claiming that you can get out of debt in no time and all, and they will knock off up to 90% of your debt owed by creditors.
In this article I am going to give you the reasons why you don’t want to get involved with companies like this and why some debt relief programs are even considered a scam.
Why You Don’t Want To Join
- They take your money. Once signed up a debt negotiation company will contact all of your creditors and arrange a deal to pay back a certain amount back. They will usually require then that you pay them one check every month to cover all of your bills. The problem with this is that most companies will neglect to pay some of your bills in order to collect their fees.
- They don’t solve the problem. On of the biggest problems with these kinds of programs are they have no prevention methods to stop you from falling back into debt. In fact many companies will keep you in their program up to 48 months or longer to get you to keep paying the fees.
- They report negatively on your credit report. Debt negotiation companies can have a huge effect on your credit score. When a creditor deals with a debt relief company a lot of times once the debt is paid off it will read either, paid as agreed, or, pay for delete. This will have a huge negative effect on your credit score. In order to have this not count against you is should read, paid in full.
- Watch out for the fees. Finally, the fees are the worse part of the whole program. The typical fees inside these programs will run around 15% of your total debt you place with the program. For example, if you placed $10,000 into this program you could expect to pay around $1500 to the debt relief program.
The Reality Of Debt Relief Programs
The reality is that if you did have an extra $100 or $200 a month you wouldn’t need a program like this. However it’s usually those that are the most desperate who get stuck in a program like this and fall even more in debt once they find out that have just been ripped off.
If you are looking for real help this website is the best place to start, here we have all kinds of informative how to articles to help you out and get started but if that is not an option you may be able to try The National Foundation For Credit Counseling.
This company is the real deal and is also a non profit organization working with individuals to help them get out of debt once and for all.
This post was recently featured in the Carnival of Personal Finance by The Wisdom Journal.
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