Guest Post On Debt Settlement…!

Thanks to Trishia Wagner from DestroyDebt.com for our 1st ever guest post…!

Can Debt Settlement Companies Really Prevent Bankruptcy?

The recession does not spell disaster for all businesses.  In fact companies that offer services to help people pay off or eliminate debt are experiencing a boom in business.  Over the past few weeks I have noticed an increase in radio advertisements for debt settlement companies; offering services to help people get out from under a “mountain” of debt.  Have you wondered if debt settlement companies can really help people get out of debt or do they put you on the fast track to filing for bankruptcy?

Here we address some of the myths surrounding debt settlement companies and the services they provide.

Settling Your Debt Will Ruin Your Credit-  If your financial hardship is severe enough to warrant debt settlement services it is likely your credit is already headed toward trouble.  Most debt settlement companies accept clients who have a significant amount of debt ($10,000 and up) who are experiencing a legitimate financial hardship.  If you qualify you may have already fallen behind on your payments or are barely treating water keeping up with your payments.  While you are in the process of settling your debt your credit will be adversely affected however once you are debt free you have the opportunity to rebuild your credit quickly.

All Debts Are Negotiable- Most unsecured debts such as credit cards, medical bills, and personal loans are negotiable while student loans, car loans and mortgage loans are not negotiable.

Creditors Won’t Settle Debt- Debt settlement or negotiation has been around for a number of years.  It is often considered the last step before filing for bankruptcy.  For this reason many creditors will negotiate for a lower lump sum payment versus risking receiving nothing if the client files for bankruptcy.  This does not mean all negotiations will be successful but more creditors are willing to settle debt than many people believe.

You Need A Professional To Negotiate Debt- If you are interested in negotiating your debt you do not need to hire a debt settlement company to do the work.  Most people who sign up with a debt settlement company either don’t know this or they are willing to pay the settlement company to “handle” the negotiations.  If you decide to negotiate your own debt you should know there is a right and wrong way to go about things which is why many people feel more comfortable letting professional debt negotiators do the work for them.

The Key is Finding The Right Company
There is no guarantee that working with a debt settlement company will prevent bankruptcy.  Until your debt is settled or paid in full you are still obligated to repay the debt and failure to do so can lead to lawsuits and judgments against you.  For this reason it is imperative that you do your research before signing any contracts with debt settlement companies.  You must understand the process and the risks involved in the process.

There are plenty of scam artists out there who are interested in your money only and not concerned about helping you get out of debt.  The Internet can be an invaluable tool, you should see if there are complaints lodged against the company at the Better Business Bureau.  You can check company reviews and search forums where people who have experience with debt settlement companies share their stories.  The worst thing you want to do is pay some company administration and maintenance fees only to discover your debt is growing, you are vulnerable to lawsuits and have to file bankruptcy in the end anyway.

Trisha Wagner is a freelance writer for DestroyDebt.com, a debt community featuring debt forums. Trisha writes regularly on the topics of getting out of debt and personal finance.

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Thanks Trisha!

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