I’m talking about debt settlement companies.
You’ve seen the ads — settle your credit card debt without filing bankruptcy! Yay!
The first thing you should know about debt settlement is that it really is possible, under certain circumstances, to get your credit card company to accept less than you owe in full settlement of your debt.
That’s 100% true.
But hiring a debt settlement company to get you there? You might want to consider:
- Most, if not all, debt settlement companies charge a hefty fee up front, which they keep regardless of whether your debt gets reduced.
- In fact, a depressingly low percentage of customers get their debt reduced. An awful lot of customers end up filing for bankruptcy.
- Assuming you get a settlement, it goes on your credit record.
- Also, under certain circumstances, a settlement might result in taxable income to you.
- Working with a debt settlement company usually, if not always, involves paying money into a third-party account — money that you would ordinarily be paying to the credit card company.
- That means that, until you actually reach a settlement with your credit card company, your credit card company is likely to try to collect from you — with phone calls, letters, and even lawsuits.
- Much, if not all, of the “service” provided to you by a debt settlement company is stuff that you might well be able to do yourself.
It is possible that there is an honest debt settlement company out there, I suppose. I just haven’t ever heard of one.
I did an internet search for “reputable debt settlement company.” I found one company that claimed to have a spotless reputation for honesty. But when I searched for that company’s name on the internet, I wasn’t able to find one single non-suspicious web site supporting the company’s claim.
To paraphrase Sam Malone from Cheers: “Not that many people know this, but we’ve got a great reputation!”
Check out the article in today’s New York Times:
