The debt settlement industry is surging ahead like never before. Earlier there used to be a limited number of debt settlement companies. With the increasing number of debtors opting for it as an effective debt help option, many companies have mushroomed in different cities. Since the number of debt settlement agencies have increased, you may find it difficult to figure out which companies are authentic. So, before you decide to settle your debts with the help of debt settlement firms, do a thorough investigation of the company you are intending to hire.
The TASC or The Association of Settlement Companies aim at carrying out debt settlement activities in a fair and just manner. They also protect consumer’s interest and see that debt settlement companies are operating as per norms.
How does the debt settlement company help you?
When you are opting for debt settlement with the help of a debt settlement company, you do not have to make payments to the creditors. You make payments to a trust account where your money accumulates till it becomes at least half of what you owe to the creditors. Once that amount is reached, the debt settlement companies negotiate and try to convince the lender so that a part of your outstanding balance (usually 50% to 60%) can be pardoned. If it is agreed upon, you enjoy a lower rate of interest and lower monthly payments.
How much does the debt settlement firm charge?
The debt settlement firm charge fees for opening your account. In addition to that they take a monthly service charge from you. However, fees differ depending on your debt amount and the company you are hiring.
Scams involving debt settlement companies
Recently, several fraudulent activities have taken place in the debt settlement industry. Reports suggest that many companies retained the money of debtors instead of paying it to the creditors. When asked they said it was their fees but the same was not disclosed earlier. Few debt settlement companies take the first 3 monthly payments as their initial fees. Few incidents stated that even after making payments to the debt settlement firms, debtors received threatening calls from collection agencies. Check the credibility of the debt settlement company you are hiring from the Better Business Bureau (BBB) so that you can avoid unpleasant incidents.
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