Debt Settlement ??
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Debt Settlement ??
| Wed, 09-17-2008 - 6:56pm |
Heyyy.... ok so im in alot of debt. about $60,000 in credit and medical bills. courtesy of my ex (thanks!!) : / . anyway my friend was thinking about going with this "Debt Settlement" company . She said they are supposed to cut her debt in half and they told her her monthly payments would be very low. Has anyone here tried this? or looked into it? cause shes thinking about it. She asked if i wanted the company's information because they are a member of TASC ??? (anyone heard of TASC?). she said they are legit. but does it not sound too good to be true??? HELP PLEASE

What that company will do if nothing that you can not do yourself. They will contact your creditors and ask them for either a settlement (a portion of the balance due that is acceptable to the creditor) or for a payment plan that you can work with. Alot of creditors will waive some fees for accounts, especially if there are alot of fees for late payments or for interest.
Credit Card companies are in just as much crisis as everyone else and they want to get paid- even if it is a reduced amount. They will work with you. As long as you are honest with them and tell them truthfully what you can afford, they will work out something that both sides are agreeable with.
Think about this- if they do not try to work with you and you decide to file for bankruptcy, they get nothing. You might even want to say that when you talk to them- something like "I want to try to get this paid, I can afford XX a month towards this account. I have XX amount of other creditors I am working with to come up with a payment plan on all of my accounts, so I can not afford to pay more to you at this time. Hopefully this will work because if not, I am going to have to file for bankruptcy."
Contrary to credit card companies reputation, they will work with you and as long as you ask the right questions and approach it in such a way, and if you are going to be late- dont avoid them. Be honest with them and tell them. It is the not knowing for credit card companies as to why they start harrassing you. If you tell them you cant make the payment this money, they will note the account and should quit calling, at least for a little while.
On a side note, if you do agree to a payment plan both sides can commit to, the credit card company will probably advise you if you miss an agreed payment all deals are off. That is why you should be honest with them as to what you can really afford to pay them on a monthly basis.
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One other thing- most of these companies charge you a % of the total debt. They will convince you that this is such as small price to pay for cutting your debt in half. What they neglect to tell you is that their fees will come out first- from people I know who have done this- it was their first 3 payments.
Example:
You have the following debt:
Credit Card A $1000.00 ($700.00)
Credit Card B $1500.00 ($1100.00)
Credit Card C $2000.00 (1600.00)
Lets just assume that the amount in () is the actual debt, not including late fees, interest, over the limit fees.
Lets say the Debt Settlement Company gets your credit cards to agrees to the following "amount" that will be your debt with them and forgives the rest:
Credit Card A $1000.00 ($700.00) Agreed Amount $850.00
Credit Card B $1500.00 ($1100.00) Agreed Amount $1300.00
Credit Card C $2000.00 (1600.00) Agreed Amount $1800.00
First off, this means that your minimum monthly required payments are automatically be less.
Credit Card A $1000.00 ($700.00)
Agreed Amount $850.00
Previous monthly payment $100.00 month
New monthly payment $65.00 month
Credit Card B $1500.00 ($1100.00)
Agreed Amount $1300.00
Previous monthly payment $30.00 month
New monthly payment $10.00 month
Credit Card C $2000.00 (1600.00)
Agreed Amount $1800.00
Previous monthly payment $50.00 month
New monthly payment $20.00 month
Right off the bat your monthly payments went from $180.00 to $95.00. Almost in half.
Now, you start making payments (one payment) to the debt settlement group immediately- usually within 15 days. They get your signed CONTRACT and your check and start working on your credit cards. In the meantime, your creditors do not get paid. The debt settlement company sends letters to your creditors to advise them that this is what you can afford and will they agree to it. This can go round for round- which gives time to the debt settlement company before they have to make the payment to your credit cards. Maybe even a few months. Nothing gets paid to your creditors and they are not calling you b/c they are working with a company on your behalf, so automatically you think tings are great! But they are not. You will get a statement from your cc and see that nothing has been paid. Your payment to the company who is handling your case gets paid first.
Anytype of credit card negotiations can be handled directly by you. Nothing a company can do is out of the scope of what you as the individual and owner of the account can do.
Hope this helps !
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Oh, I forgot- TASC is the Association of Settlement Companies.
Just cause someone claims to be a member of a "group" it does not mean it is crediable. All it means is that they have paid some fee to be listed as a "member".
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